Deductibility of Attorney's Fees for Maintenance Contributions
Deductibility of Attorney's Fees for Maintenance Contributions : the position of the Federal Tribunal
A taxpayer submits their tax return to the Cantonal Tax Administration. They declare having received CHF 223,736 in maintenance contributions and claim a deduction of CHF 320,908 as income acquisition costs, corresponding to attorney’s fees incurred to obtain these contributions.
The case is brought before the Federal Tribunal (hereinafter the "FT"), which is called upon to rule on the deductibility of attorney’s fees related to obtaining a maintenance contribution.
First, the court examines the tax nature of these contributions and the taxation system to which they are subject. These contributions constitute a specific type of income, distinct from other earnings. The maintenance contribution received by the taxpayer is taxable as income for the beneficiary. The taxpayer who pays the contribution may deduct this same amount.
Second, the FT assesses the deductibility of expenses incurred to obtain a maintenance contribution. Under Article 25 of the Federal Act on Direct Federal Taxation (LIFD), net income is calculated by deducting from the total taxable income the general deductions and expenses mentioned in Articles 26 to 33a LIFD. This provision must be understood as a general clause, meaning that income acquisition costs may be deducted even if they are not explicitly listed in Articles 26 and following of the LIFD.
According to case law, income acquisition costs are those that the taxpayer cannot avoid and that are directly caused by the realization of taxable income. To be admissible, these costs must have a close and direct connection to the taxable income.
In principle, attorney’s fees can be considered deductible income acquisition costs. However, in the absence of a sufficient connection between these fees and the acquisition of income, the FT has never recognized this deductibility in practice.
Family law proceedings often aim to resolve all issues related to the end of cohabitation. The wide range of issues addressed makes it difficult to establish a direct and close causal link between attorney’s fees and the obtaining of maintenance contributions. As a result, it becomes impossible to distinguish costs specifically related to maintenance contributions from those related to other matters.
Finally, the FT concludes that a matrimonial law proceeding should not be treated differently under Article 25 LIFD merely because it is limited to the issue of maintenance contributions. Thus, the FT considers that attorney’s fees incurred to obtain a maintenance contribution cannot be classified as deductible income acquisition costs.
Me Maxime Guffon