The Previous Practice

Many of our members support parents or children in their home countries, often at great personal sacrifice. Until now, it was common practice to send money via services such as Western Union, MoneyGram, or Wise, where relatives could collect the money in cash locally (so-called "Cash Pickup"). This method was often the only possible one, as bank branches are rare in many regions of Africa or Asia.

What Changes from 2025

With the Annual Tax Act 2024, the tax office is tightening the reins. From the assessment period 2025, the strict "bank-to-bank principle" applies.

This specifically means: Support is only tax-deductible if the money is transferred and lands directly in a bank account of the supported person.

No longer sufficient: The deposit with a payment service provider if cash is paid out in the end. Even if you have a receipt for the deposit, the tax office will no longer recognize it, as the final receipt cannot be seamlessly verified via an account.

The goal of the law: The state wants to ensure that the money arrives with the needy person without a doubt and to exclude identity misuse.

Legal basis: You can find the detailed explanations of the new regulations in the official BMF letter dated October 15, 2024 on maintenance expenses for persons living abroad.

A Problem in Practice

As a wage tax assistance association, we know that this regulation ignores the reality of many people's lives. In rural areas of Somalia, Nigeria, or Togo, the nearest bank account is often unreachable or associated with high hurdles. The popular and functioning cash systems are now effectively "punished" for tax purposes.

Our Urgent Recommendation

So that you can continue to claim your payments in the 2025 tax return (which we will prepare in 2026), you should act now – as far as somehow possible:

• Check account opening: Ask your relatives to open a bank account locally.
• Switch services: Use the "Bank Transfer" option (transfer to account) with providers such as Wise or WorldRemit instead of "Cash Pickup".
• Documentation: Continue to keep all receipts from which the recipient's account number is evident.

If opening an account in the home country is actually impossible due to crises or lack of infrastructure, please contact us early. In absolute hardship cases, we must examine whether exception rules could apply – however, this will be a case-by-case decision of the tax offices.