German court rules on alimony tax deductions during separation year

The Lower Saxony Finance Court has ruled that alimony payments made to a permanently separated spouse cannot be claimed as special expenses (Sonderausgaben) under § 10 Abs. 1a Nr. 1 EStG during the year of separation.

The court dismissed a lawsuit filed by a taxpayer who sought to deduct maintenance payments while opting for individual assessment. The court reasoned that the restriction is not explicitly stated in the wording of the law but stems from the purpose of the regulation and the systematic structure of spousal taxation.

Because spouses still retain the right to choose joint assessment with the splitting tariff during the year of separation, the court found that the tax disadvantages the law aims to mitigate have not yet occurred. Consequently, the court determined that spouses are still treated as a community of earnings and consumption during this period. The case is currently pending revision before the Federal Fiscal Court (Bundesfinanzhof).