Expenses incurred for professional reasons can be claimed as income-related expenses (Werbungskosten) on your tax return. Income-related expenses can include commuting costs (Fahrtkosten), job application costs, costs for business trips, further education (Fortbildungen), work equipment (Arbeitsmittel), professional insurances, and more. According to §9 of the Income Tax Law (EStG, Einkommensteuergesetz), income-related expenses emerge from acquiring, securing, and maintaining your income.
The income-related expenses lump sum
An income-related expenses lump sum (Werbungskostenpauschale / Arbeitnehmer-Pauschbetrag) of 1,200 euros (previously 1,000 euros before the 2022 Tax Relief Act) per year is automatically taken into account when you submit your tax return to the tax office. You are not required to provide any proof - the lump sum is automatically deducted from your taxable income.
Many employees have income-related expenses which exceed the lump sum amount. Those who wish to claim the full amount can simply provide proof of the purchases exceeding the lump sum when submitting their tax return. Additional lump lums are listed below.
For each day you commute to work, 0.30 euros can be deducted from your taxes per kilometer for one-way distance between home and work. This is part of the commuter allowance (Pendlerpauschale).
Note: Only one-way distance per working day can be deducted.
The allowance applies regardless of means of transportation and can therefore also be claimed by cyclists or carpoolers. A maximum of 4,500 euros per year can be deducted with the commuting allowance and as of 2022, the allowance increased to 0.38 per kilometer from the 21st kilometer of one-way travel (previously 0.35).
Commuter expenses exceeding 4,500 euros per year can be deducted if you meet one of the following conditions:
- If you maintain a double household and must travel to your primary home for family
- You drive your own car or a company car
- Your expenses for public transport exceed 4,500 euros per year
These expenses must be proven to the tax office in the form of fuel receipts, a logbook, or train tickets.
Business trips & further education
Travel expenses for business trips or further education are also tax-deductible. Thanks to the kilometer lump sum (Kilometerpauschale), 0.30 euros per kilometer can be deducted for both outward and return journeys.
Note: You can’t claim expenses that your employer has reimbursed.
Room & board lump sum
If you are absent from work for a business trip or further education for an extended period of time, you are entitled to compensation for room and board provided your employer hasn’t already covered them. The lump sum amounts to 14 euros for absences greater than 8 hours, and 28 euros per working day.
Professional equipment (Arbeitsmittel)
Items used predominantly (more than 90% of the time) for professional purposes are fully recognized as income-related expenses (Werbungskosten) and can be claimed on your tax return. As long as a single piece of work equipment does not exceed 952 Euros (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 the course of several years.
Only costs that have not already been reimbursed by the employer can be deducted. Some possible examples of professional equipment include:
- Work attire
- PCs, notebooks, smartphones
- Technical literature
Expenses for job-related moves are fully tax-deductible as income-related expenses. In addition to travel costs, other costs such as expenses for a moving company, real estate agent fees, and double rent payments can also be deducted. For additional costs, there is a “lump sum for other moving expenses” (Pauschale für sonstige Umzugskosten) that is paid without requirement of proof, e.g. for renovation work of your old flat. As of June 1st 2020, this amount is 860 euros for the entitled person and 573 euros for each additional person who moves with them (i.e. partner and children).
Those who maintain a second residence for professional reasons can deduct many of the costs for the second home from their taxes as income-related expenses. These can include:
- Rent and utility costs (Miete und Nebenkosten)
- Secondary residence tax (Zweitwohnsitzsteuer)
- Home furnishings
- Costs for travel between your primary and secondary residence
Note: As of June 1st, 2020, you don’t owe a broadcasting fee (Rundfunkbeitrag) for your secondary residence if you can prove that you (or your partner, your flatmates, etc.) already paid it for your main residence. Important: You have to apply to be exempt from the fee for your second residence.
In order to deduct expenses for your second household, you must meet the following conditions:
- Your second residence is for professional reasons
- You can reach work at least 30 minutes faster from your second residence than from your primary residence
- You contribute financially to your primary residence (at least 10%)
- The core of your personal life takes place at your primary residence (family, friends, social events)
Contributions to professional associations & trade unions
Contributions to professional associations (Berufsverbände) and trade unions (Gewerkschaften) are tax-deductible.
All insurances that cover professional risks can be claimed as income-related expenses. This includes, for example, professional liability insurance (Berufshaftpflichtversicherung), accident insurance, (Unfallversicherung) or insurance for legal expenses (Rechtsschutzversicherung).
Insurances that cover private risks (health and long-term care insurance, life insurance, liability insurance, legal expenses insurance, etc.) do not count as income-related expenses, but can instead be deducted as special expenses (Sonderausgaben).
Telephone and internet costs
If you use a private telephone or private internet access point for professional reasons, the costs can be deducted on a pro-rata basis. Without individual proof, a rate of 20% with a maximum of 20 euros per month can be claimed.