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How to save money on your taxes for pandemic year 2020 (and what to watch out for)

The unusual working conditions that were forced upon Germany by the pandemic have opened up opportunities to save money on your tax return. But there could be a nasty surprise in store too.

How to save money on your taxes for pandemic year 2020 (and what to watch out for)
Home office. Photo: DPA/Julian Stratenschulte

Filling out tax forms is obligatory for more people than usual in Germany this time around. While employees don’t normally have to fill out their tax returns, anyone who took in more than €410 in Kurzarbeit allowance last year must file a tax return.

The good news is that the pandemic has created a few opportunities to save some pennies.

Home office savings

Many of us have been sent into home office this year by our employers as the country tries to limit personal contacts.

The good news here is that you can deduct an office space in your house from your overall earnings.

If your office is a separate room in your house that you use exclusively as an office, and you worked in it for at least three of the five days of the week, then you can deduct the entire rental cost of this room, plus the heating and electricity costs, from your salary.

There is a cap here of €1,250 on the business expenses you can claim, unless you can show that your home office is the “qualitative centre” of your job. In other words, you have carry out most of the activities essential to your job there. But since most meetings now happen over Zoom or by telephone, it shouldn’t be too hard to prove this applies to you!

If you’ve just been using the kitchen table or you’ve set up a desk in the corner of your bedroom, don’t worry.

For the first time, in the 2020 tax year there is also a savings to be made here. This year, the tax authorities recognize any type of home office as a €5 per day work expense up to a maximum of €600.

READ MORE: What you need to know about tax changes in Germany in 2021

According to a report in Spiegel though, this €600 tax gift for 2020 isn’t as shiny as it seems. The tax office will not count it as an additional expense on top of the block €1,000 every taxpayer is given as an automatic earnings deduction for work expenses. That means that you have to prove more than an additional €400 in work expenses in order to jump over that €1,000 hurdle.

Office materials are key

The good news is that you can also deduct the money you spent on office materials for your new home office from your tax bill. A new monitor for your computer, an office chair, or a printer will all be approved as business expenses.

According to the consumer watchdog Stiftung Warentest, you can only deduct a percentage of a notebook computer from your tax bill, as the Finanzamt considers computers to be used as much for private entertainment as for business purposes.

There is also an important change on computers this year. The normal rule is that, if the purchase price before VAT is under €800, you can deduct it from tax in a single year. If it’s above €800 you have to deduct it over three years.

But an exception has been made for 2020 – regardless of how expensive you computer is, you can deduct the entire price from your income.

Possible arrears payments

Some six million people in Germany were put on Kurzarbeit (reduced work) at the height of the crisis last year. While that programme saved many people from unemployment, the slight downside is that it has had an impact on one’s tax declaration.

This is due to something called the Progressionsvorbehalt (progression caveat). The tax code states that money that you receive as benefits from the state, such as unemployment benefits, parental support, or short-time working benefits, are tax free.

READ ALSO: Why people on ‘Kurzarbeit’ in Germany need to prepare for a tax surprise

But that is not the end of the story. Thanks to the Progressionsvorbehalt, the money you receive in benefits is taken into account when the tax office considers how much tax you should be paying on the rest of your earnings.

Basically, the amount that you receive in benefits is added to the amount you received as income, and the state calculates your tax rate based on this total.

In many cases, the result is that people have to pay an additional sum in tax on top of what has been taken from their salary throughout the year. In other words, the Kurzarbeit benefits push you into a higher tax bracket.

Experts say that the difference could be around €1,600 for a gross income (salary plus benefits) above €40,000.

SEE ALSO: Everything you need to know about paying taxes in Germany

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Should Germany shorten Covid vaccine intervals to combat Delta?

A single vaccine dose has been shown to be largely ineffective against the Delta variant of Covid-19 - so German health experts are considering whether a shorter gap between the first and second dose is needed.

Should Germany shorten Covid vaccine intervals to combat Delta?
A sign directs people to the vaccination centre in Berlin's now-defunct Tegel Airport. Photo: picture alliance/dpa | Soeren Stache

With the the proportion of Delta variant Covid cases rising in Germany, experts are currently mulling over a new strategy to combat it: shortening the intervals between the first and second dose of the vaccine.

The new approach is being considered in light of the fact that vaccinated people are likely to be protected highly infectious variant – but only if they have had all necessary doses of the vaccine. 

READ ALSO: Share of Delta variant Covid cases in Germany almost doubles in a week

“The question is not a trivial one,” Thomas Mertens, the head of the Standing Vaccination Commission (STIKO), told DPA.

According to the Ulm-based virologist, there are various pros and cons to shortening the gaps between doses.

“We are currently trying to secure the necessary evidence,” he added.

So far, Stiko has been recommending longer intervals between the two vaccinations than the intervals stipulated by regulators when the vaccines were approved. 

There are good reasons for this: with AstraZeneca, for example, evidence suggests that the longer you wait between vaccines, the better immunity you have.

With limited doses of vaccines available – and ongoing supply issues – there is also an argument for providing as many people as possible with the first dose, so that as many people as possible are at least partly protected against the virus.

READ ALSO: ‘Vaccinate quickly’: German states seeing surge in Delta variant Covid cases

For AstraZeneca, the previous advice from the panel of experts at Stiko is to allow twelve weeks to elapse between the first and second dose. For the mRNA vaccines – Pfizer/BioNTech and Moderna – the recommended interval is six weeks.

According to the pharmaceutical regulators, however, a faster course would be possible: two BioNTech doses three weeks apart, with Moderna and AstraZeneca given four weeks apart.

In the case of the AstraZeneca vector vaccine, according to the Health Ministry, those wishing to be vaccinated are free to agree the interval individually with doctors within the permitted period of four to twelve weeks.

“A certain distance improves the effectiveness of the vaccine”

Helge Braun (CDU), Chancellor Angela Merkel’s chief of staff, told the Morgenmagazin on Thursday that the government’s main challenge was to offer all over-12s at the least one dose of the vaccine by the end of summer.

READ ALSO: ‘This can be a good summer’: Half of Germans vaccinated at least once against Covid

Regarding the timing of the second dose, the main concern should be effectiveness, he said.

“We just know that a certain distance improves the effectiveness of the vaccination,” he told reporters. 

When pressed on whether shortening the intervals between doses was the advice of the hour, Braun said it wasn’t.

On Twitter, German immunologist Carsten Watzl pointed out that, while cases of Delta were rising as a proportion of infections due to falling infection rates overall, the actual number of infections with Delta was still stable – and may even be declining. 

This means that the longer, 12-week interval for AstraZeneca vaccinations could be still be used as long as people were fully vaccinated by autumn, he said. 

The virologist Christian Drosten has been pointing out for a long time that the first jab is not particularly effective against Delta. 

This is also the view of Watzl, who would like to see the majority of people fully protected in time for a potential fourth wave of the virus. 

“The second vaccination is urgently needed in order to be able to properly ward off the mutations,” he said in a recent interview with the German Press Agency.

“Shortening the current vaccination intervals, especially of BioNTech, of course makes sense in order to achieve complete inoculation as quickly as possible,” said the chief executive of the National Association of Statutory Health Insurance Physicians, Andreas Gassen, on Wednesday.

“The maximum vaccine interval for BioNTech is only justified by the lack of vaccines.”

In Germany, increased shares of the Delta variant, first discovered in India, are now being recorded.

However, the number of cases caused by the mutation has only increased relatively slightly so far, while the trend for infections caused by the still dominant Alpha variant is declining more sharply.

In the future, it is expected that Delta will overtake Alpha as the dominant variant of Covid-19 in Germany.