Düsseldorf Fiscal Court, 30/03/2013, Ref.: 10 K 2392/12 E
The background to taxpayers being able to claim certain expenses as so-called extraordinary expenses is the fact that there are expenses that taxpayers cannot defend themselves against and that are greater for them than for a comparable group.
Such expenses include, for example, parental maintenance, medical costs or the costs of artificial insemination.
The question of whether the costs of divorce are deductible as extraordinary expenses in the tax return is a recurring theme.
On this subject, the Düsseldorf tax court has now ruled in the above-mentioned decision that the court and legal costs associated with the divorce can be claimed in full for tax purposes.
Case Background
In the dispute before the Düsseldorf tax court, a divorced spouse had incurred court and legal fees totalling EUR 8,195 for the divorce. These costs included not only the divorce itself, but also expenses in connection with pension equalisation, equalisation of gains and post-marital maintenance. However, the tax office only recognised the costs directly associated with the divorce and the pension equalisation, while the expenses for the property settlement and maintenance claims were not deductible.
Decision of the tax court
The Düsseldorf Fiscal Court ruled that all expenses can be claimed as extraordinary expenses for tax purposes. It stated that a divorce necessarily requires the use of lawyers and the organisation of court proceedings. As a rule, arrangements would also have to be made regarding pension equalisation, accrued gains and maintenance. The associated costs were therefore unavoidable and could not be averted by the spouses.
Significance of the decision
The court pointed out that it makes no difference whether parts of the divorce are settled by a judgement or by a settlement. With this decision, the tax court contradicted the so-called non-application decree issued by the tax authorities on 20 December 2011, which stated that a full deduction of civil proceedings costs was not permitted in the case of divorces. The tax court did not follow this ruling and clarified that the entire cost structure in connection with a divorce must be recognised for tax purposes.
Conclusion
The decision of the Düsseldorf Fiscal Court has far-reaching consequences for divorced spouses who wish to claim costs in connection with a divorce for tax purposes. It shows that all costs associated with divorce, including expenses for pension equalisation and post-marital maintenance, should be recognised as extraordinary expenses. This judgement could also have an impact on future decisions in similar cases, as it takes a clear stance against the previous guidelines of the tax authorities.
Source: Düsseldorf Fiscal Court
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