No Special Expense Deduction for Maintenance in the Year of Separation
The Niedersächsische Finanzgericht (Lower Saxony Fiscal Court) ruled in its judgment of 26 August 2026 (case no. 9 K 10/26) that maintenance payments to a spouse who is permanently living apart cannot be deducted as special expenses under § 10 para. 1a no. 1 EStG (German Income Tax Act) in the assessment period of the separation. The action was unsuccessful on the merits.
In the court’s view, the special expense deduction is excluded in this scenario, even though such a restriction does not follow directly from the wording of the provision. Rather, the decisive factors are the purpose and intent of § 10 para. 1a no. 1 EStG as well as the systematic classification of the provision in relation to the rules on taxation of spouses.
The decision concerns an issue that has not yet been clarified by a supreme court. The Niedersächsische Finanzgericht has allowed an appeal on points of law; the proceedings are pending before the Bundesfinanzhof (BFH, Federal Fiscal Court) under case no. X R 26/26.
Purpose of § 10 para. 1a no. 1 EStG
Compensation for the Loss of the Splitting Benefit
According to the reasoning of the Niedersächsische Finanzgericht, § 10 para. 1a no. 1 EStG essentially serves to mitigate the tax consequences arising from the loss of the splitting benefit. In the court’s view, this purpose does not yet apply in the year in which the spouses separate.
In the year of separation, spouses still have the option to elect joint assessment. This means they can continue to benefit from taxation under the income splitting tariff. As long as this election right exists, the court sees no scope for additionally taking into account maintenance payments to the spouse who is permanently living apart as special expenses under § 10 para. 1a no. 1 EStG.
The central consideration underlying the decision is therefore the priority of spousal taxation as long as joint assessment with application of the splitting tariff remains available in the year of separation.
Systematic Classification under Income Tax Law
The Niedersächsische Finanzgericht also bases its decision on systematic considerations. In the court’s view, the provisions on spousal taxation already largely take account of the allocation of income and burdens between spouses.
According to the decision, this also includes taking general maintenance expenses into account within the system of spousal taxation. Against this background, the statutory scheme argues against an additional special expense deduction for maintenance payments in the year of separation.
The court’s key considerations can be summarised as follows:
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According to the decision, the wording of § 10 para. 1a no. 1 EStG contains no express restriction for the year of separation.
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In the court’s view, the restriction follows from the purpose and intent of the provision.
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The purpose of the rule is to mitigate the loss of the splitting benefit.
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In the year of separation, the option of joint assessment continues to exist.
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Spousal taxation largely takes account of the allocation of income and burdens between spouses.
Restoration of the Previous Procedural Position Where the Time Limit for Bringing an Action Was Missed
Reference to the Absence of Electronic Transmission
In addition to the substantive legal question concerning the special expense deduction, the Niedersächsische Finanzgericht also addressed restoration of the previous procedural position after a time limit for bringing an action had been missed. Under § 56 para. 1 sentence 1 FGO (German Fiscal Court Code), a claimant must, upon application, be granted restoration if certain requirements are met.
The court held that restoration may be considered if, after receipt of the action, the court did not inform the claimant within the ordinary course of business that electronic transmission was missing. The decisive issue was whether a procedural omission by the court can supersede a prior fault on the part of the claimant.
Reference to the Case Law of the Bundesfinanzhof
In this respect, the Niedersächsische Finanzgericht relied on the case law of the Bundesfinanzhof. According to that case law, a party to proceedings may expect obvious mistakes to be identified by the court seized within a reasonable period of time.
As an example, the case law refers, for instance, to the absence of a signature where such signature is required to meet a deadline. In such cases, the court’s procedural duty of care requires that measures be taken within the proper course of business to avoid an imminent failure to meet a deadline.
If such a notice is not given within the ordinary course of business, the court’s omission may, according to the case law described, supersede the claimant’s prior fault. As a consequence, restoration of the previous procedural position must be granted.
Appeal on Points of Law Pending before the Bundesfinanzhof
Supreme Court Clarification Still Pending
The Niedersächsische Finanzgericht has allowed an appeal on points of law. According to the available information, leave to appeal was granted due to the fundamental significance of the legal matter and for the further development of the law. The appeal proceedings are pending before the Bundesfinanzhof under case no. X R 26/26.
A final supreme court decision is therefore not yet available. Until the Bundesfinanzhof issues a decision, the question of whether maintenance payments to a spouse who is permanently living apart are deductible as special expenses in the year of separation remains unresolved by a supreme court.
The decision of the Niedersächsische Finanzgericht bears case no. 9 K 10/26 and is dated 26 August 2026.
Significance for Tax Structuring in the Year of Separation
The decision makes clear that the tax treatment of maintenance payments in the year of separation depends substantially on the interaction between the special expense deduction and spousal taxation. In the view of the Niedersächsische Finanzgericht, continued access to joint assessment with the splitting tariff precludes the special expense deduction under § 10 para. 1a no. 1 EStG during this period.
For entrepreneurs, investors and high-net-worth private individuals, tax issues in connection with separation, maintenance and the choice of assessment method can be of considerable economic importance. MTR Legal Rechtsanwälte advises clients on tax law matters relating to private and business asset structures. Further information can be found under Legal advice in tax law.
