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Tax after the separation: tax class, assessment, Realsplitting
In tax terms the separation is a question of a cut-off date, and that date is 31 December. Anyone who knows it often saves a four-figure sum in the year of separation. Anyone who overlooks it notices only a year later on the assessment notice.
Karcher Rechtsanwälte in Frankfurt am Main, Germany, focusing on uncontested divorce and international family law. Advice in German, English and Spanish.
Part of our guide How does a divorce work?The cut-off date is 31 December, not the day you move out
Tax law thinks in calendar years. For joint assessment it is therefore enough that the conditions were met at some point during the year (§ 26 EStG); a single day together is sufficient.
Anyone separating in February can still be assessed jointly for that entire year. Only in the following year does separate assessment apply. That is regularly the last opportunity for the splitting advantage, and the further apart the incomes lie, the more clearly it shows.
One day together in January saves joint assessment for the whole year.
A side effect that plays a role in practice: a serious but failed attempt at reconciliation can open the period again. In family law it does not interrupt the year of separation (§ 1567 (2) BGB), but in tax terms it can have an effect; on that, year of separation: when can you file for divorce?.
Does the other have to play along?
Frequently yes. From marital solidarity follows the duty to consent to joint assessment where that lowers the other’s tax burden and the consenting party suffers no disadvantage themselves. Where a disadvantage does arise for them, it has to be made good; the duty then exists nonetheless.
Where somebody refuses consent without reason, it can be enforced in court. In practice, though, the better order is to record the division of refund, back payment and compensation for disadvantages in writing beforehand. After that, consent comes more easily.
From the following year: tax class and assessment
On 1 January after the separation the position changes:
- Assessment: separate instead of joint assessment; the splitting advantage falls away.
- Tax class: the combinations III/V and IV/IV are no longer available; class I applies. The change has to be notified, it does not happen by itself.
- Class II: anyone caring alone for a child registered in their household can switch to class II and use the relief amount for single parents (§ 24b EStG).
The change affects net income directly, and with it every maintenance calculation built on it. Anyone dropping into class I in January has less net income, and that shifts the calculation under separation maintenance for both sides.
Realsplitting: the most important lever
Spousal maintenance paid can be deducted as a special expense, up to 13,805 euros a year, increased by the contributions to basic health and long-term care insurance taken on for the other (§ 10 (1a) no. 1 EStG). That is called limited Realsplitting and applies to separation maintenance as well as to post-marital maintenance.
The mechanism has two sides. The payer saves tax. The recipient has to tax the same amount as other income (§ 22 no. 1a EStG), and can thereby not only pay tax but also suffer disadvantages in social benefits, contributions or subsidies. That is why the procedure works only jointly:
- The recipient consents, on the Anlage U form.
- The consent applies on an ongoing basis until it is revoked; the revocation takes effect only for the following year.
- The payer owes compensation for disadvantages: they have to reimburse the recipient for their additional tax burden.
- The recipient is obliged to consent as soon as that compensation has been promised.
On balance an advantage almost always remains, because the payer is usually in the higher tax bracket. Doing the sums is nonetheless worthwhile in the individual case, and the promise of compensation belongs in writing, best of all in the divorce settlement agreement.
Where the recipient does not consent, the deduction as an extraordinary burden remains as a substitute (§ 33a EStG). It is considerably narrower in amount but requires no consent.
Children: child benefit, allowances, childcare costs
Child benefit is paid out to one parent but belongs economically to both; hence it is set off by half against child maintenance, see child maintenance: reading the Düsseldorf table properly.
The child allowances belong to both parents in equal halves. Under certain conditions the other’s share can be transferred to you, for instance where they do not meet their maintenance obligation. Childcare costs can in principle be claimed by the person to whose household the child belongs and who bore them.
What comes next
What else applies at once with the separation, from the home to the accounts, is set out under separation before the divorce. Because the tax class shifts net income and with it every maintenance calculation, it belongs in the stocktaking under separation & maintenance.
And anyone wanting to settle refunds, back payments and the compensation for disadvantages bindingly will find the frame for it in the divorce settlement agreement.
This article sorts out the family-law consequences of the tax decisions. It is not tax advice and must not be; the specific calculation of your burden belongs in the hands of your tax adviser or of an income tax assistance association. We make sure that consent and compensation for disadvantages are settled cleanly in legal terms.
Attorney at law · focus on family law
Admitted since 2010, more than fifteen years of experience in advising and representation. The contact for new instructions at Karcher Rechtsanwälte in Frankfurt-Gallus.
Legal notice: This article is provided for general information and does not replace legal advice in an individual case. Any laws, deadlines and amounts mentioned reflect the state of affairs at the time of publication and may change. A binding assessment requires a personal consultation.