For employees, income-related expenses (Werbungskosten) include all those expenses that must be incurred in order to be able to pursue a profession. They include, for example, travel costs to work (Fahrtkosten), application costs, business trips, further training (Fortbildungen), expenses for work equipment (Arbeitsmittel) or professional insurance. The legislator defines income-related expenses in general terms as:
According to § 9 EStG (Einkommensteuergesetz), income-related expenses are expenses for acquiring, securing and maintaining income.
How high is the lump sum for income-related expenses?
The tax office takes into account the employee lump sum (Arbeitnehmer-Pauschbetrag) of 1,000 euros per year as income-related expenses. No evidence is required for this lump sum and the amount is automatically deducted from taxable income.
Many employees have far higher work-related costs per year. Those who wish to claim the full amount of income-related expenses for tax purposes can do so easily by filing a tax return. In this case, the tax office can demand proof in the form of invoices or other receipts. For many expenses, however, lump sums can be claimed here as well.
Travel costs to work
For each working day, you can deduct the commuter allowance (Pendlerpauschale) of 0.30 euros per full kilometre from your taxes for the one-way distance between home and work.
Important: You can only deduct the one-way distance per working day.
The allowance applies regardless of the means of transport and can also be claimed, for example, by cyclists or carpoolers. A maximum of 4,500 euros per year can be deducted for tax purposes with the commuting allowance. In 2021, the allowance will increase to 0.35 euros per full kilometre from the 21st kilometre of one-way travel.
Are your travel costs over 4,500 euros per year? If one of the following points applies to you, you can deduct them for tax purposes over and above the maximum limit:
- These are family journeys home within the context of maintaining two households
- You drive your own car or a company car
- Your expenses for public transport exceed 4,500 euros per year
You must prove the expenses to the tax office in the form of fuel receipts, a logbook or train tickets.
Business trips & further training
Travel expenses for business trips or further training can also be deducted from taxes. With the kilometre lump sum (Kilometerpauschale), both outward and return journeys can be claimed at 0.30 euros per kilometre.
Note: If the employer has already reimbursed certain costs of a business trip or further training, you can of course no longer claim them as your own expenses.
Lump sum for additional expenses for meals
In the case of longer absences from the first place of work, employees are entitled to compensation for additional meal expenses. Provided that the employer does not pay any expenses or similar, the lump sum for meals is 14 euros for absences of more than 8 hours. For absences of 24 hours, a lump sum of 28 euros applies.
Business trips abroad
In the case of business trips abroad, two lump sums apply:
- the lump sum for additional expenses vor meals
- the lump sum for overnight stays
The amount of these lump sums depends on the country travelled to on business. In its BMF-letter of 3 December 2020, the Federal Ministry of Finance (Bundesfinanzministerium) announced the amount of the foreign lump sums for 2021.
Work equipment (Arbeitsmittel)
Items used predominantly (more than 90%) for professional purposes are fully recognised as income-related expenses (Werbungskosten). Provided that a single work equipment does not exceed costs of 952 Euro (incl. 19% VAT), it can be fully deducted in the same year. In the case of more expensive purchases, the purchase price can be written off over several years.
Only costs that have not already been reimbursed by the employer can be deducted. In principle, any item can be work equipment.
Typical examples are
- Work clothes
- PC, notebook, smartphone
- technical literature
Expenses for job-related removals are fully tax-deductible as income-related expenses. In addition to travel costs, other costs such as expenses for a removal company, estate agent fees and double rent payments can also be deducted. For some costs, there is a "lump sum for other moving expenses" (Pauschale für sonstige Umzugskosten) that is paid without proof, e.g. for renovation work in the old flat. From 1 June 2020, it amounts to 860 euros for the entitled person and 573 euros for each additional person who moves with them (life partner and children).
Maintenance of two households
Those who maintain a second household for professional reasons can deduct many costs for the second home from their taxes as income-related expenses. These include:
- Rent and additional rental costs (Miete und Nebenkosten)
- Secondary residence tax (Zweitwohnsitzsteuer)
- Furniture and other furnishings
- Travel between primary and secondary residence
Note: Since 1 June 2020, no broadcast fee is due for your secondary residence if you can prove that you (or your partner, your flatmates, etc.) already pay a broadcast fee for your main residence. Important: You must apply for exemption from the obligation to pay the broadcast fee for your secondary residence!
Conditions for the tax deductibility of a secondary residence
- The secondary residence is set up for professional reasons.
- The place of work can be reached at least 30 minutes faster from the secondary residence.
- There is a financial contribution to the dwelling at the primary residence (at least 10%).
- The primary residence is the centre of life (family, friends and clubs).
Contributions to professional associations & trade unions
Contributions to professional associations or trade unions tax deductible.
All insurances that cover a professional risk can be claimed as income-related expenses (Werbungskosten). This includes, for example, professional liability insurance (Berufshaftpflichtversicherung), accident insurance for occupational accidents (Unfallversicherung) or legal expenses insurance (Rechtsschutzversicherung).
Insurances that cover a private risk (health and long-term care insurance, life insurance, liability insurance, legal expenses insurance, etc.) do not count as income-related expenses, but can be deducted as special expenses.
Telephone and internet costs
If a private telephone or private internet access is also used for work, the costs can be deducted on a pro-rata basis. Without individual proof, a rate of 20%, but a maximum of 20 euros per month, is recognised.