Which expenses are deductible for an employee in the German income tax return?
Business expenses are all expenses an employee has to incur in order to practice a job. In this article, Christian Schmidt (Founder, Tax Advisor and Lawyer at Rechts- und Steuerberatung Schmidt in Düsseldorf) describes in detail, the different kind of expenses an employee can deduct in the German tax return to reduce the tax burden at a maximum.
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The tax authorities will automatically deduct a lump sum with an amount of 1.000 € as job-related expenses. For this lump sum, no proof is required. This amount is automatically deducted from the taxable income.
Nevertheless, many employees have job-related expenses significantly exceeding this amount. In that case, the employee can deduct all actual incurred costs. However, the tax authorities might request proof of those expenses.
Typical job-related expenses
Commuting expenses from home to workplace
- It is possible to deduct 0,30 € per km (one way, the shortest way needs to be considered)
- This lump sum applicable is independent from the vehicle used
- Instead of the lump sum, the actual incurred costs can be considered e.g. monthly train ticket (a proof might be requested)
- Remark: It has to be checked whether it is more favorable to deduct the lump sum of 0,30 € or the actual incurred costs
- For business trips in relation to an external activity, a lump sum of 0,30 € can be deducted as travel costs for both ways
- In case of being away from the regular workplace, you can deduct a lump sum for meal allowances e.g. when being away for more than 8 hours, the lump sum is 12 €, for 24 hours the lump sum is 24 €, etc.
- For business trips abroad other figures apply
- Remark: In case the employer refunds certain costs of a business trip, this has to be included in the tax return and has to be offset with the above-mentioned lump sums.
Training, further education, studies
- Exam and tuition fees
- Interest payments for a loan to finance the education
- Work equipment
- A lump sum of 0,30 € as travel costs for both ways can be deducted
- A lump sum for meal allowances can be claimed when being away from home/work more than 8 hours
Items which are mainly used for job-related purposes can be fully deducted in the German tax return. If the costs for the items are not exceeding 952,00 € (including 19% VAT), it can be deducted at once in the tax return. If it is exceeding the amount, the costs have to be depreciated over several years depending on their usual period of use (e.g. usual period of use of a laptop is 3 years).
Typical examples of work equipment:
- Working clothes (clothes which you can also wear in your leisure time are not deductible. Only working clothes such as uniforms, protective clothing e.g. lab coat are deductible)
When you move in another city for job purposes you can deduct the costs in your German tax return. It is not possible to deduct costs when the relocation is of private nature.
- Travel costs (e.g. hotel costs, flight costs, train costs etc.)
- Agency fees
- Transport costs
- Double paid rent
- Storage of furniture
- Remark: Furthermore, it is possible to deduct a lump sum for moving expenses (as of 1st February 2017, the lump sum for married couples is 1.528 €, for singles 746 €, and for children 337€.) This lump sum can additionally be deducted to the actual moving expenses
Double Household related costs
Many expatriates relocate to Germany while their family is staying abroad. In that case it is possible to deduct double household related costs.
- Allowance for additional meal expenses (maximum of 24 € per day) for the first three months
- Rent in Germany (up to a monthly maximum amount of 1.000€)
- Flight and other travel costs to visit the family in home country (it is also possible to deduct the travel costs of the family for traveling to Germany)
- Agency fee
- Phone and internet costs
- Initial furnishing of flat
Further job-related expenses
- Application expenses
- Fees for professional associations
- Costs for home office
Have any additional questions related to taxes and claiming work expenses? Contact Christian Schmidt and his team at Rechts- und Steuerberatung Schmidt.
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