Unterhaltserkärung and Kontovollmachten

[gylee]

Hello,

I send money regularly overseas to my mother and mother-in-law to support them. However, due their old age, the money is sent to the bank accounts of my sister and sister-in law. They are the one to manage the use of the money for our parents.

I added Unterhaltserklärung to my income tax report for 2022. I explained the above condition in addition to all the proofs of bank transfers. However, in my Steuerbescheid it is stated that the Unterhaltserklärung was not processed by the Finanzamt with the reason that I could not provide Kontovollmachten. Does anybody understand what Kontovollmachten is in this case? Does that mean my parents MUST have bank accounts and they write Vollmachten that my sister and in-law take care of their bank accounts? Or, would it be sufficient that our parents write statements that they are aware that money for them is sent through the bank account of my sister and in-law?

Any help is greatly appreciated. I could call the Finanzamt with my limited German, but maybe it is faster here to get information.

[PandaMunich]

Hello,

I send money regularly overseas to my mother and mother-in-law to support them. However, due their old age, the money is sent to the bank accounts of my sister and sister-in law. They are the one to manage the use of the money for our parents.

I added Unterhaltserklärung to my income tax report for 2022. I explained the above condition in addition to all the proofs of bank transfers. However, in my Steuerbescheid it is stated that the Unterhaltserklärung was not processed by the Finanzamt with the reason that I could not provide Kontovollmachten. Does anybody understand what Kontovollmachten is in this case? Does that mean my parents MUST have bank accounts and they write Vollmachten that my sister and in-law take care of their bank accounts?

The Finanzamt obeys what was written by their "boss", the German Ministry of Finance (= BMF = Bundesministerium der Finanzen) in the BMF-Schreiben "Berücksichtigung von Aufwendungen für den Unterhalt von Personen im Ausland als außergewöhnliche Belastung nach § 33a Absatz 1 Einkommensteuergesetz (EStG)" which in English is:
Consideration of expenses for the support of persons abroad as an extraordinary burden in accordance with Section 33a (1) of the Income Tax Act (EStG)

• in German: https://esth.bundesfinanzministerium.de ... nhalt.html
• machine-translated into English: https://esth-bundesfinanzministerium-de ... r_pto=wapp

And it says in there in Randziffer 15:

• Abweichender Kontoinhaber
  15
  Bei Überweisungen auf ein nicht auf den Namen der unterhaltenen Person lautendes Konto im Ausland ist neben den inländischen Zahlungsbelegen eine Bescheinigung der Bank über die Kontovollmacht und über den Zeitpunkt, die Höhe und den Empfänger der Auszahlung erforderlich.

• Different account holder
  15
  In the case of transfers to an account abroad that is not in the name of the dependent person, a certificate from the bank confirming the account authorisation and the time, amount and recipient of the payment is required in addition to the domestic payment receipts.

--> the Finanzamt assumes that even though the account is not in the parent's name, that the parent has Kontovollmacht over their daughter's account, i.e. could withdraw money from her account and actually did withdraw the money.
And now they ask for that Kontovollmacht.
By the way, they should also ask for the bank to confirm that the parent withdrew on dd.mm.yyyy an amount of ??? from the daughter's bank account.

Or, would it be sufficient that our parents write statements that they are aware that money for them is sent through the bank account of my sister and in-law?

I've seen cases where the Finanzamt also accepted those, but officially, no, they do not have to.
Please note that the Finanzamt also has the right to ask for translations into German of all documents, see Randziffer 3:

• 2. burden of assessment/principles of proof/increased duty of cooperation and provision of evidence on the part of the taxpayer
  3
  In accordance with the general principles of proof applicable in tax law, the taxpayer bears the objective burden of proof for tax reductions (burden of proof). In the case of circumstances abroad, taxpayers must make a special effort to clarify and obtain suitable evidence and, in special cases, additional evidence (Section 90 (2) AO). Accordingly, the taxpayer has a duty to provide evidence when organising the actual circumstances. The documents must show that sums of money belonging to the taxpayer have actually been used and have reached the support recipient. If the taxpayer wishes to claim their expenses for tax purposes, they must ensure that they have reliable and easily verifiable receipts or certificates that show the receipt and outflow of the funds. Self-declarations or affidavits alone are not sufficient means of establishing credibility (BFH judgement of 3 June 1987, BStBl II page 675). In the case of documents in a foreign language, a German translation by an officially authorised interpreter, a consulate or another competent (foreign) office is required. Expenses incurred for this are not support expenses.

--> to avoid this in the future, open an account in each parent's name immediately and do the transfers into that account.
Each parent can then give their daughter Kontovollmacht over their account, this is then not something that interests the Finanzamt, if they see that the bank account is in the parent's name, they are happy, see Randziffer 13:

• 6. proof of expenses for support
  6.1 Bank transfers
  Postal and bank receipts
  13
  Transfers must generally be evidenced by postal or bank receipts (booking confirmations or account statements) that show the person receiving the support as the recipient. Such documents generally provide sufficient proof of when and how much money was transferred from the taxpayer's assets, and it can generally be assumed that these amounts also reached the addressee's sphere of control, namely that they were booked to the addressee's bank account abroad or handed over in cash by the post office (BFH ruling of 14 May 1982, BStBl II page 772). Expenses incurred for the money transfer (postage, expenses and handling fees) are not support expenses.