Making funeral arrangements makes sense and relieves the burden on the surviving dependents – but it has no tax benefit. Many people hope in vain for a tax advantage if they plan for their own funeral during their lifetime.
Münster Finance Court confirms: No deductibility during your lifetime
The Münster Finance Court made it clear in a recent ruling (Az. 10 K 1483/24 E) that costs for funeral arrangements are not tax deductible. The specific case shows the problem clearly: A taxpayer had paid around 6,500 euros for a funeral provision contract and wanted to claim this sum as an extraordinary burden in his income tax return before his death.
However, the court clearly rejected this plan. The judges justified their decision with two key points: Firstly, a voluntary funeral provision cannot be assumed to be inevitable within the meaning of income tax law. On the other hand, the expenses would not exceed the usual standard of living, as a large number of taxpayers also use this method to protect themselves against their own death.
As per the post by t online As can be seen, “extraordinary burdens are expenses that a taxpayer inevitably incurs and that are higher than the cost of living for the vast majority,” explains Daniela Karbe-Geßler from the Taxpayers’ Association. However, the tax bonus is only intended for expenses that go beyond what many others would have to shoulder.
Difference between precautionary measures and actual funeral costs
While funeral provisions are not tax deductible, funeral costs can, under certain circumstances, be claimed as extraordinary expenses – but only by the surviving relatives. They can deduct the costs if the expenses actually arise from the death of a relative.
However, there is one important requirement here: the funeral costs must have been higher than the assets of the estate for the heir who is responsible for paying the costs. Only the difference can then be claimed as an extraordinary burden in the tax return. If the estate of a deceased person contains sufficient financial resources for their own funeral, no tax benefit can be claimed. In addition, there is a deductible flat rate for funeral costs of 10,300 euros, which can be applied regardless of the actual amount of costs.
Special features of funeral insurance
Another important aspect concerns funeral insurance, which is often chosen as a form of funeral provision. The tax regulations here have changed significantly over the years. Funeral insurance policies that were taken out before December 31, 2004 and have a minimum term of twelve years are still deductible as special expenses and can reduce taxable income.
However, this advantage no longer applies to all insurance contracts concluded from January 1, 2005. Contributions to newly taken out death benefit insurance policies are no longer tax deductible. This change in the law had a major impact on decisions regarding funeral arrangements and shows how important the timing of the conclusion of the contract is.
At least the payouts from death benefit insurance remain tax-free for the recipients – a small consolation for the non-deductibility of the contributions.
D. Maier / editorial team finanzen.net