diff --git a/modules/TDEL10n.cmake b/modules/TDEL10n.cmake
index dfafa1b..7af4a1b 100644
--- a/modules/TDEL10n.cmake
+++ b/modules/TDEL10n.cmake
@@ -12,10 +12,8 @@
 
 ##### include essential TDE macros ##############
 
-if( NOT DEFINED MASTER_SOURCE_DIR )
-  set( MASTER_SOURCE_DIR "${CMAKE_SOURCE_DIR}" )
-  include( TDEMacros )
-endif( )
+set( MASTER_SOURCE_DIR "${CMAKE_CURRENT_SOURCE_DIR}" )
+include( TDEMacros )
 
 
 ##### verify required programs ##################
@@ -154,6 +152,11 @@ endfunction( )
 #####   ATTRIBUTES determines files and specification for extractattr:
 #####     source_spec:element,attribute[,context]
 #####   DESTINATION determines directory to save translation template.
+#####     The destination directory is determined as follows:
+#####     a) Directory is specified as an argument.
+#####     b) The variable POT_SOURCE_DIR is set.
+#####     c) There is a 'translations' directory.
+#####     d) There is a 'po' directory.
 #####
 ##### Note:
 #####    Editing the _files list inside foreach( ${_files} ) below in the
@@ -234,11 +237,27 @@ macro( tde_l10n_create_template )
   if( NOT _catalog )
     tde_message_fatal( "the name of the translation catalog is not defined" )
   endif( )
+
+  # determine the destination directory
+  if( NOT _dest )
+    if( POT_SOURCE_DIR )
+      set( _dest ${POT_SOURCE_DIR} )
+    elseif( EXISTS "${MASTER_SOURCE_DIR}/translations" )
+      set( _dest "${MASTER_SOURCE_DIR}/translations/" )
+    elseif( EXISTS "${MASTER_SOURCE_DIR}/po" )
+      set( _dest "${MASTER_SOURCE_DIR}/po/" )
+    else( )
+      tde_message_fatal( "cannot determine destination directory" )
+    endif( )
+  endif( )
   if( ${_dest} MATCHES "[^/]$" )
     set( _dest "${_dest}/" )
   endif( )
+  if( ${_dest} MATCHES "^[^/]" )
+    set( _dest "${CMAKE_CURRENT_SOURCE_DIR}/${_dest}" )
+  endif( )
 
-  get_filename_component( _potFilename "${CMAKE_CURRENT_SOURCE_DIR}/${_dest}${_catalog}.pot" ABSOLUTE )
+  get_filename_component( _potFilename "${_dest}${_catalog}.pot" ABSOLUTE )
   file( RELATIVE_PATH _potFilename ${CMAKE_SOURCE_DIR} ${_potFilename} )
   message( STATUS "Create translation template ${_potFilename}" )
 
@@ -462,8 +481,8 @@ macro( tde_l10n_create_template )
     string( REGEX REPLACE "\\.tde_l10n(:[0-9]+)" "\\1" _pot ${_pot} )
 
     # save translation template
-    if( EXISTS "${CMAKE_CURRENT_SOURCE_DIR}/${_dest}${_catalog}.pot" )
-      file( READ "${CMAKE_CURRENT_SOURCE_DIR}/${_dest}${_catalog}.pot" _potOrig )
+    if( EXISTS "${_dest}${_catalog}.pot" )
+      file( READ "${_dest}${_catalog}.pot" _potOrig )
     else( )
       unset( _potOrig )
     endif( )
@@ -472,7 +491,7 @@ macro( tde_l10n_create_template )
       string( REGEX REPLACE "\n\"POT-Creation-Date: [^\"]*\"\n" "" _potNew ${_pot} )
     endif( )
     if( NOT _potOrig OR NOT "${_potNew}" STREQUAL "${_potOrig}" )
-      file( WRITE "${CMAKE_CURRENT_SOURCE_DIR}/${_dest}${_catalog}.pot" ${_pot} )
+      file( WRITE "${_dest}${_catalog}.pot" ${_pot} )
     endif( )
 
   endif( _pot )