It’s significantly more difficult for bachelor’s students to claim a tax refund than master’s students. This discriminatory tax scheme was already found unconstitutional by the Federal Finance Court in 2014. Now the Federal Constitutional court to decide in the last instance.
In the view of the legislator, all costs that are incurred by an initial education are considered extraordinary expenses. An initial education includes a bachelor’s degree since it results in a full-fledged professional qualification and with it you can get a job in the free labor market.
Typical first degree coursese are:
- Bachelor’s degree without a previously completed occupational training
- Occupational training (e.g. banker, Versuchungskaufleute, hairdressers, carpenter and many more)
- The first state exam (Staatsexamen)
- Change of degree of studies before graduation
First degree courses are not:
- Courses for vocational preparation or orientation
- Basic training at the Federal Armed Forces
According to currently existing law, tuition fees for the initial education (e.g. bachelor’s degree without previous occupational training) are only partly deductible: up to 6.000 Euro as extraordinary costs (not as work-related tax deductions). What’s more, tax refunds for extraordinary expenses can only be claimed in the year that they were incurred and cannot be carried over into later years. That is to say, deductible extraordinary expenses expires when your income in this year is not enough to exhaust all 6.000 Euro in total.
We recommend you claim the tuition fee for the initial education as work related tax deduction. All costs can be deducted as work-related tax deduction in our tax tool.
A second education is every degree of studies that’s after completion of the first degree of studies.
Typical second degrees are:
- Master’s degree
- a second occupational education
- Bachelor’s degree after completing an occupational education (E.g. a degree after an apprenticeship)
- Occupational education after completing a bachelor’s degree
- First degree as a part of service or on-the-job training e.g. officers, professional soldiers, the federal armed forces or in a dual degree program
- A university degree after completing a course of study in a technical college, teacher’s college or an art academy
- doctoral studies
- MBA degree program
- Legal trainee and prospective teacher after the first Staatsexamen
- postgraduate studies in the “Master of Laws” (LL.M degree)
- When you take multiple courses of studies simultaneously: after completing the first course of studies, the second course of studies would count as the second degree
The full amount of tuition fees for a second degree are considered as work-related tax deductions and loss carry forward can be applied. When the work-related expenses exceed the income, a loss arises. This loss can be carried over in later years when you earn money. When the work-related expenses exceed the income, a loss arises. This loss can be carried over in later years when you earn money.
Difference between the first and second degree
The Federal Finance Court holds the discriminatory treatment of first and second degree unconstitutional. It contradicts the ability-to-pay principle and the general principle of equality. The question regarding the first degree courses stays the subject of a decision by the Federal Constitutional Court. Those who would like to benefit from a positive decision of the Federal Constitutional Court should submit a tax declaration and have the loss assessed, as well as whether no gains were generated.