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In its judgment of 21 November 2014, published on 10 December 2014 (Az. 4 K 1829/14 E), the 4th Senate of the Finanzgericht Münster ruled that divorce proceeding costs are still deductible as extraordinary expenses even after the statutory amendment applicable from 2013 onwards. The court bases its decision on the fact that these costs arise inevitably, since a marriage can only be dissolved through court proceedings. According to the court, the amendment in § 33 Abs. 2 Satz 4 EStG, in force since 2013, does not preclude this result, because without the divorce proceeding and the resulting litigation costs, the plaintiff would risk losing her livelihood and would no longer be able to meet her essential needs to the usual extent. The costs for the divorce settlement agreement, however, are not deductible, since these expenses did not arise inevitably and were not deductible under the previous case law either. The settlement payment itself does not constitute an extraordinary expense, but rather consideration paid by the plaintiff for the acquisition of co-ownership of the property and for the discharge of further claims. Note: The Senate has granted leave to appeal to the BFH. Source: FG Münster
Frequently asked questions
Frequently asked questions
Are divorce costs deductible as an extraordinary burden?
According to a ruling by the Münster Tax Court dated 21 November 2014 (Az. 4 K 1829/14 E), divorce proceedings costs remain deductible as an extraordinary burden even under the revised § 33 Abs. 2 Satz 4 EStG applicable from 2013 onward. The court reasoned that a marriage can only be dissolved through court proceedings, making these costs unavoidable. An appeal to the BFH has been admitted, so the final legal position remains open.
What role does Section 33 (2) sentence 4 EStG play in divorce costs?
The amendment effective from 2013 generally restricted the deduction of litigation costs as extraordinary expenses (außergewöhnliche Belastung). However, the Münster Tax Court considers divorce litigation costs deductible, since without the divorce the taxpayer would risk losing their livelihood and being unable to meet essential needs. They therefore fall under the exception to the new rule.
Are the costs of a post-divorce settlement agreement tax-deductible?
No, according to the Fiscal Court of Münster, costs for a post-divorce settlement agreement (Scheidungsfolgenvereinbarung) are not deductible as extraordinary expenses. Such costs are not unavoidable, since the agreement can also be reached out of court. Even under previous case law, these costs were not deductible.
Can compensation payments in the context of a divorce be claimed as an extraordinary burden?
No, compensation payments do not qualify as an extraordinary burden. They are considered consideration, for example for the acquisition of co-ownership of real estate or for the settlement of other claims between the spouses. A tax deduction under § 33 EStG is therefore not possible.