Deductibility of maintenance for an adult child

After a divorce, child support usually becomes due, which is paid regularly or irregularly to cover ongoing needs. From a tax perspective, these payments are deductible from the income of the payer. For this deduction to be allowed, however, the maintenance must only be paid up to the child's age of majority and only to the custodial parent, and not directly to the child.

After a divorce, child support is usually awarded in most cases, which can be deducted from the income of the payer and added to the income of the recipient. As such, maintenance and support contributions that are paid regularly or irregularly to cover ongoing needs are considered maintenance contributions under tax law. For these to be deductible from the income of the payer as described in Art. 33 para. 1 lit. c DBG, the maintenance contributions must be paid to a parent for children under their parental care. Payments made in fulfillment of other family law maintenance or support obligations, which are generally tax-free for the recipient according to Art. 24 lit. e (first sentence) DBG, are not deductible. Therefore, the payer cannot deduct them from their income.

On February 21, 2018, the Federal Court dealt with a case from Fribourg. A couple divorced there in 2003. The son, born in 1990, was to stay with the mother, so it was agreed that the husband would pay a monthly maintenance contribution of CHF 15,000 until the child reached the age of 18 or completed his education. However, these payments were not made, and in 2010 the son sued his father for the missed payments. Subsequently, father and son agreed on a payment of 800,000 CHF, which the father finally made to the now adult son. The tax-liable father deducted this payment from his income as it was deemed a deductible maintenance payment under Art. 33 para. 1 lit. c DBG. However, it was not accepted because the amount was qualified as a non-deductible capital settlement and not as a back payment of a periodic maintenance obligation. The payment had been made directly to the son and at the time of the payment, he was already of age.

Before the Federal Court, it was demanded by the taxpayers that the payment should be deductible from the income since it was owed to the son for the time before his majority. However, the Federal Court also contradicted the taxpayers. In order for maintenance contributions for a child according to Art. 33 para. 1 lit. c DBG to be deductible, the parental care of the child at the receiving parent is required. According to Art. 296 para. 1 in conjunction with Art. 14 CC, children are only under parental care until they reach majority. In the present case, the son was already an adult. Furthermore, unlike required under Art. 33 para. 1 lit. c DBG, the payment was made not to the mother but directly to the son. These reasons did not allow for deductibility, which is why the Federal Court dismissed the case.

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