Maintenance payments to relatives abroad: Stricter proof required for cash payments
Many foreign nationals living and working in Germany support relatives abroad. Additionally, individuals with a foreign spouse may provide financial support to their spouse's relatives. Since 2007, the tax office has imposed stricter requirements on proving the recipient's need and the payments made for maintenance payments to relatives abroad. Particularly stringent proof requirements apply to cash payments.
The Federal Fiscal Court rejected maintenance payments to the mother living in Hungary because the cash payments were not sufficiently proven. In the case of maintenance payments to recipients living abroad, the parties involved are particularly obliged to cooperate in clarifying the facts and obtaining evidence. The evidence required to prove a fact depends on the circumstances of the individual case (BFH ruling of 9.3.2017, VI R 33/16).
- Proof of a cash payment requires a reliable recipient confirmation and a timely, complete proof of the "payment chain", i.e., evidence of withdrawals or the specific availability of these amounts at the time of payment by the maintenance payer. Merely having the appropriate income and asset situation is not sufficient.
- Furthermore, the maintenance payer must provide detailed evidence of the "how and when" of the cash payment. Therefore, convincing proof is hindered if the payer cannot prove that they were at the payment location for the claimed cash payment. Although the maintenance payer does not have to personally hand over the cash, they must name the intermediary, i.e., the person who delivered the money.
- In the court case, there was no proof that the stated payments were actually made. The submitted receipts were insufficient. They did not indicate whether the recipient received the payments as a lump sum or in instalments. The receipts stated a total payment of 1.800 Euro. Additionally, the receipts did not specify when the payment(s) were made. The documents were dated, but the date only referred to the day of issue, not the time of the cash payment.
However, the BFH allows for some relief: "The fulfilment of the obligations to clarify the facts and to provide for and obtain evidence must be necessary, possible, reasonable, and proportionate." For example, in the case of a civil war, evidential relief regarding the procurement of official certificates may be considered.
The Federal Ministry of Finance has recently issued two comprehensive decrees on the deduction of maintenance payments, including the proof of maintenance payments. There are several important points to consider, especially for payments to relatives living abroad (BMF letter of 6.4.2022, IV C 8-S 2285/19/10002 :001 and 10003 :001). Among other things, the following applies:
Transfers to relatives abroad must generally be proven by postal or bank documents (booking confirmations or account statements) showing the supported person as the recipient. If several people living in a shared household are supported, it is sufficient if the transfer documents are in the name of one of these people. For transfers to an account abroad not in the name of the supported person, a bank certificate regarding the account authorisation and the time, amount, and recipient of the payment is required in addition to the domestic payment documents.
The taxpayer may also choose another payment method if the maintenance payment made in this way is sufficiently proven. For cash maintenance payments and all other payment methods, increased evidence requirements must be met. Withdrawal proofs and detailed recipient confirmations are required. There must be a sufficient factual connection (period of no more than two weeks) between the withdrawal and the respective cash payment. The trip must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.
Relief applies for family visits by the taxpayer to their supported family living abroad. A family visit only occurs if the taxpayer visits their spouse living abroad, who continues to maintain the family household there. If the spouse also lives in Germany and the taxpayer only visits their children or parents living abroad, it is not considered a family visit, and increased evidence requirements apply again.
For employees, it can generally be assumed that the taxpayer takes a net monthly salary for the maintenance of the spouse, children, and other relatives living in the spouse's household on each family visit. This evidential relief applies only to up to four family visits per calendar year. As part of the evidential relief, however, a maximum amount can be claimed, which results from the fourfold net monthly salary minus other proven or credibly demonstrated payments. If the taxpayer claims higher expenses than (flat rate) the fourfold net monthly salary, all payments must be proven according to the general principles.
Money transfers through an intermediary (this also includes a neutral commercial transport company) can generally not be recognised. This does not apply if, due to the special situation in the country of residence (e.g., crisis area), no other payment method is possible. In this case, in addition to the identity of the intermediary (name and address), the exact travel route must be presented, and a complete proof of the origin of the money in Germany and every single step until the handover to the supported person must be provided. The trip by a private intermediary must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.
A recipient confirmation must be issued for each individual cash payment. It must include the name and address of the taxpayer and the supported person, the date of issue and the recipient's signature, as well as the place and time of the cash payment. To fulfil its intended evidential function, it must be issued in exchange for the cash payment. Subsequently issued or combined recipient confirmations do not meet the proof requirements.
