Since its launch in 2017 it’s helped thousands of expats working and living in Germany.
To give you an idea on how you can save money here is an overview of all Income-related expenses that can be deducted from your income tax bill. It includes things like commuting to work, business trips, further education, work clothes or occupational insurance.
How high is blanket deduction for income-related expenses?
The tax office takes into consideration a lump sum (Arbeitnehmer-Pauschbetrag) of up to 1,000 € a year as income-related expenses. This means for up to 1,000 €, no receipts or evidence is required. For a lot of employees the costs accrued in order to practice their profession are higher than 1,000 €. Those costs are also tax-deductible, which is easily done through tax declaration. In that case the tax office can ask for corresponding proof.
1. Trips to work
You can get back 0,30€ from your taxes for every kilometre between home and work (one way). You can use this lump sum regardless of your transport mode - by train, own or shared car. The maximum sum you can declare with the commuter’s tax allowance is up to 4,500 € a year. If your actual expenses are higher than that, it might be more effective if you don’t use the lump sum. In that case, you can declare all of your actual travel expenses. To take advantage of that option, you need to hand in all of your collected receipts for fuel and public transport.
2. Business trips
Expenses for business trips and seminars are tax-deductible as well.
Note: If the employer has already reimbursed the fees for the business trip or the seminar you have to declare this in the tax declaration.
3. Food allowance
A business trip involves spending a certain amount of time away from your home. For this period of time you can claim a food allowance for the first 90 days.
If you work outside your normal workspace you get a compensation for the higher costs that you have during that time. If your employer doesn’t pay any per diems, you can claim 12 € for any trip longer than 8 hours. If the trip is covering full days you can claim 24 € per day. If it is an international trip the per diems are way higher than that, e.g. for France 115€, London 224€ or San Francisco 314€.
4. Work-related tools
A purchased item that is mostly used for work-related purposes can be listed as income related expenses. An item that is not more expensive than 487.90 € can be declared immediately and entirely the same year. If the item is more expensive than that, it can be written off over a number of years. Without evidence of purchase you can still deduct the 110 € allowance for work equipment.
The items can only be deducted if the employer hasn’t already compensated the costs.
In theory every object can be a work-related tool. Typical examples are:
- Work clothes
- PC, notebook, smartphone
- Workplace equipment (desk, office chair, book shelf)
5. Work-related relocations
The required costs of relocating your main address in cause of your work are tax-deductible. Travel costs can be deducted as well as movers, brokerages and the double amount of rent you have to pay. On top there is a lump sum for any further moving expenses of 764 € (since 1/2/2017) that can be used without any evidence.
6. Running two households
If you need to have a second household because of your work, you can deduct a lot of the costs for your second flat.
- Rental costs and additional costs
- Tax on second homes
- fee for radio
- Furniture and other fittings
- Journeys between the first and second flat
1. The second home is furnished for work-related reasons.
2. It’s at least 30 min faster to reach the working place from the the second home.
3. You partly own the flat that is your principal residence.
4. The principal residence is the primary centre of life.
5. Fees for professional organisations, unions or donations
You can offset your donation entirely against tax as well as fees for professional organisations and unions.
8. Professional insurance
Every insurance that covers a professional risk can be declared as professional expenses. For example professional liability, accident insurance (for accidents that happen in a professional frame) or legal costs insurance (employment law) fall into this category.
Insurances that cover a private risk (health insurance, private nursing insurance, life insurance, personal liability insurance, legal costs insurance etc) are not included here, but they can be declared as additional expenses (Sonderausgaben).
How do I get started?
You start by creating an account and file your data. The system calculates the potential return while you enter the data. Once completed you decide if you want to submit or not (if it is not obligatory for you). Only then you would need to pay the service fee. Finally the completed tax declaration will be transmitted online to the appropriate tax office. It then takes between 5 to 8 weeks to receive your tax notice from your respective Finanzamt.
On average, taxpayers in Germany receive 935 Euro with their annual tax return.. It usually takes between 30 and 40 minutes to file the tax return on GermanTaxes.de.
This content was produced by Wundertax.