What is the impact of tax reform on maintenance payments?

What will change?

Currently, maintenance payers can deduct 80% of the maintenance paid for tax purposes, provided four cumulative conditions are met

1. The maintenance obligation is based on the Civil or Judicial Code or equivalent foreign regulations.
2. The beneficiary of the maintenance payment is not part of the payer's family.
3. The maintenance money is paid regularly.
4. The payments can be proved with supporting documents.

This arrangement was intended to ease the financial burden of the payer. However, the planned revision will limit this deductibility. The coalition agreement provides that the deductibility of maintenance payments will gradually drop from 80% to 50% and that payments to countries outside the European Economic Area will no longer be deductible. 

The timing of the phasing-out has not yet been decided, but the reduction in deductibility is shown in the calculation tables attached to the budget plans.  Although there is no concrete legal provision on this at the moment, according to the calculation tables, the reduction will be gradual and will even take place as from tax year 2026 for maintenance paid in 2025. 

Maintenance money paid in 2025 would still be deductible to the extent of about 70%, 60% in 2026 and 50% in 2027. This means that maintenance money paid now will already be less tax deductible next year, even though the legislation has not yet been amended to reflect this. 

An example will better demonstrate the impact of these falling percentages. Suppose you pay a monthly maintenance contribution of 600 EUR for your two children. Then your tax benefit will look like this in the future:

As you can see, a significant reduction in deductibility in the span of barely three years. 

For individuals who in the past took into account the tax benefit when determining the maintenance payments, these lower rates will be an unexpected financial setback. These new rules are also bound to have an impact when negotiating maintenance payments. Parties are likely to deliberately choose a lower amount for the sake of lower deductibility, ultimately leading to the children bearing the brunt of these changes....

Legal certainty

The tax reform raises questions about the legal certainty of the parties involved. Indeed, agreements made in the past were often taken with a view to the tax benefits now at stake. 

In this context, the constitutional principle of the rule of law is important. This principle implies that legal rules exist, but they should also be applied and enforced in a transparent, consistent and careful manner. In addition, all citizens should receive equal treatment before the law. When the tax reform affects previously made commitments, it could lead to unequal treatment, especially if the change is not proportionate or does not sufficiently take into account commitments already made. 

In turn, the constitutional principle of the rule of law consists of three more principles, namely: the principle of legality, the principle of equality and the principle of legal certainty. 

These changes not only affect the personal financial situation of many people, but also essentially affects the principle of legal certainty. This principle ensures that citizens have a certain firmness regarding the law applicable to them. It gives citizens certainty that they know their rights and obligations, and can rely on them. To ensure legal certainty, the government should make an effort to familiarise citizens with the rules applicable to them within a reasonable period of time. Thus, when tax rules are suddenly changed without any or sufficient transitional measures, this can lead to uncertainty.

Adjustment of maintenance payments

First of all, the parents can mutually agree to change the amount of the maintenance payment. In this respect, it is also advisable to have this mutual agreement approved by the court in order to avoid any discussions in the future. 

This revision can also take place under Article 209 of the old Civil Code:

‘If he who provides the maintenance or he who enjoys it comes to such a state that one can no longer provide it or the other no longer needs it, either in its entirety or in part, relief or reduction may be claimed.’

In addition, the maintenance amount can also be changed when three cumulative conditions are met:

1. New circumstances exist;
2. Which occur beyond the will of the parties;
3. Which substantially alter the situation of the parties or their children. 

When these conditions are met, the parent can ask the court to modify the amount. In principle, the new tax regime does meet these three conditions, so this would be a valid reason to summon the court to adjust the maintenance payment. But the reverse is also possible. The influx to the courts could be so great that they would not want to allow the new tax scheme as a reason.

Permanent saisin

Under article 1253ter/7 Judicial Code, the court can review a maintenance payment at any time through the so-called permanent saisin. But is a change in the law such as this tax reform sufficient to trigger this procedure?

The permanent saisine can only be invoked if there are new elements. Article 1253ter/7, §1, second paragraph Judicial Code clarifies what is meant by these new elements: 

‘1° generally, a fact that was not known at the time of the initial application;

2° with regard to a maintenance allowance, new circumstances affecting the parties or the children which may substantially alter their situation;

3° regarding the organisation of the residence arrangement, the right to personal contact and the exercise of parental authority, new circumstances that may change the situation of the parties or that of the child. In the latter case, however, the court may grant this new request only if the best interests of the child justify it.’

The tax reform could be considered such a new element, but this is not obvious. To successfully invoke permanent saisin, the tax reform must lead to a substantial change in the financial situation of the parties involved. This will vary from case to case and depend on the judge's interpretation. One judge may allow it, while another may see it as improper use and impose a fine on the requesting party (pursuant to art. 780bis Judicial Code).