What are "Werbungskosten"? A definition of income-related expenses
According to Section 9, Paragraph 1, Clause 1 of the Income Tax Act, income-related expenses (Werbungskosten) are ‘expenses for acquiring, securing, and maintaining income’. For instance, you may need a car to drive to work, need your own toolkit on the job, invest in advanced training, or even move to a new city for work. These are expenses that allow you to secure, maintain, and earn your income as an employee. In simple terms, these are your income-related expenses.
The tax office is aware that income-related expenses are necessary for every job. For this reason, it provides each employee with an annual ‘Arbeitnehmerpauschbetrag’ or fixed allowance for employees. A sum of 1,000 Euros are automatically declared as non-taxable income for an employed person. This sum increases to 2,000 Euros for jointly assessed married couples and registered partners.
To have considerable savings when filing your tax return, you need to claim income-related expenses that exceed the fixed allowance for employees. Lucky for you, there’s plenty to deduct! Here is a list of the most common income-related expenses that you can deduct from tax:
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Travel Expenses (Fahrtkosten)
These are the costs incurred on your trip to work. You can deduct the cost of tickets or the fuel you consume. Because it is tricky to provide evidence, the tax office lets you set the commuter allowance to 30 cents per kilometre driven for your one-way commute to work. From 2021, you have the option of deducting more money for particularly long work commutes: you can deduct 35 cents from the 21st kilometre of work travel.
Even with a one-way work commute of 15 kilometres for 228 working days a year, you get 1,026 Euros as a fixed allowance for employees. On top of that, you save taxes on every additional Euro.
Work Equipment Costs
Any object that you use for work is considered a tool or ‘Arbeitsmittel’. You can deduct these as Werbungskosten from your tax return. Here’s what counts as Arbeitsmittel:
- Office supplies
- Specialist literature
If a piece of work equipment exceeds the amount of 410 Euros (excluding sales tax), the cost for this item is written off over the specified duration of its use.
Moving Costs (Umzugskosten)
If you move for work, you can deduct the costs of your move as Werbungskosten from tax. The condition is that you should have saved at least one hour of daily commuting time because of your move.
The moving costs include:
- Travel expenses to view the apartment
- Transportation costs
- Repairs in the event of transportation damage
- Brokerage costs
- Re-registering the car
- Renovation of the old apartment
Travel Expenses on a Business Trip
If you are on a business trip, you can claim your costs for travel, meals, and accommodation as Werbungskosten. Typical business trips include visits to customers or trade fairs.
- You can set the travel costs at over 30 cents per kilometre with the kilometre flat rate. But the exact travel costs can also be deducted with receipts.
- The meals are covered by the food allowance (Verpflegungspauschale).
- In the case of accommodation, you state the costs for the overnight stay, excluding meals, as the meal allowance already covers these. You can also deduct other incidental travel expenses (like parking fees) as Werbungskosten.
Second Home Costs
If you have a second home at your place of work for professional reasons, you can deduct the expenses for double-housekeeping (doppelte Haushaltsführung) as Werbungskosten. Concrete costs include:
- Rental fee
- Second residence tax
- Travel expenses for the trip home
- Costs for necessary furnishings
- Moving costs
Application Costs (Bewerbungskosten)
If you change your job or are looking for a job, you can deduct the expenses for applications (Bewerbungskosten) as Werbungskosten. These costs include:
- Travel expenses to the job interview
However, flat rates are also considered as follows:
- Application folder: 9 Euros
- Online application: 2.50 Euros>/li>
Contributions to Professional Associations
If you pay contributions to a professional association, you can deduct these as Werbungskosten from tax. Professional associations include:
- Trade Unions
- Professional Associations
- Chamber of Crafts
- Medical Association
- Bar Association
- Association of Tax Advisors
- Chamber of Architects
- Official Association
- Judges’ Association
If you are involved in educational and training programs that benefit your professional career and maintain your income, they are counted as Werbungskosten. In many professions, you need to update your knowledge base constantly. You can therefore deduct the costs for the advanced training as income-related expenses from the tax.
Costs for Your Personal Workspace or Study
Those who mainly work from home can also deduct the costs for the home office as Werbungskosten. However, the tax office has strict guidelines for what qualifies as a study. If the tax office has the shadow of a doubt, it will send you a visitor to check whether your study meets the formal requirements.
The following items are deductible from the study:
- Office furniture
- Office supplies
Be mindful: If you buy decoratives like Persian carpets for your study, they won’t be tax-deductible.
Attention: If you are already deducting costs for a separate study, you can no longer use the home office flat rate.
Bank Account Management Fees
Yes, you can also deduct account management fees for your income-specific bank account as income-related expenses.
Save Taxes Through Werbungskosten
There are many costs associated with your job. The best part is that you can deduct these income-related expenses. You can pay fewer taxes and get most of your expenses back. It is worth taking the time to consider whether there are any additional costs that you can claim in your next tax return.