What are income-related expenses (Werbungskosten)?
Income-related expenses (Werbungskosten) are all costs that incur in order to pursue a profession. This includes, for example, costs for commuting to work, for business trips, for further education, work clothes or occupational insurance. The income tax act (Einkommensteuergesetz) defines income-related expenses generally as follows:
Income-related expenses are expenses for acquiring, securing and maintaining income (§ 9 EStG).
Lump sum for income-related expenses (Werbungskosten-Pauschale)
The tax office automatically takes into account an annual lump sum for income-related expenses (Werbungskosten-Pauschale) of 1,000 euros. This lump sum is also called employee lump sum (Arbeitnehmer-Pauschbetrag). You do not need any receipts or proof for this lump sum. The amount is automatically deducted from your taxable income. Anyone wishing to claim higher income-related expenses must provide evidence of the individual items. For some of these expenses, lump sums can be claimed as well, e.g:
- lump sum for application costs (Bewerbungskosten)
- in the context of work-related relocations, there is a “lump sum for other relocation expenses” (Pauschale für sonstige Umzugskosten)
- lump sum for additional expenses for meals (Verpflegungsmehraufwand)
Note: Even if you only have low income-related expenses or were only employed for a short time in the tax year, you can claim the entire lump sum of 1,000 euros!
Typical income-related expenses for employees
For each full kilometre of one-way travel to work, you can deduct a lump sum of 0.30 euros from your taxes.
Work equipment bought for professional causes is tax-deductible. That includes for example: briefcases, laptops, phones or stationeries.
Insurance premiums covering a risk at the workplace (e.g. professional liability and accident insurance) are part of the income-related expenses.
If you have to move for work-related reasons, you can claim the costs against tax. There is a lump sum for part of the costs.
1. Commuting to work
The distance allowance (Entfernungspauschale), also called commuter allowance (Pendlerpauschale), takes into account each full kilometre between home and place of work at a lump sum of 30 cents.
Note: You can only claim one-way travel per working day.
The type of transport is not relevant: You can also claim the lump sum if you travel by train or bicycle. From 1 January 2021, the lump sum will increase to 35 cents per kilometre from the 21st kilometre of the one-way journey.
The distance allowance is part of the income-related expenses and is deductible up to 4,500 per year.
Do you have annual travel expenses that exceed this maximum limit? Then you can deduct your expenses from tax if one of the following cases applies to you:
- It is family home travel in 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 have to prove the expenses in your tax return in the form of receipts , driver’s log or train tickets.
2. Business trips
Your expenses for business trips and seminars are also tax-deductible, unless your employer reimburses them. Travel expenses are divided into:
- travel expenses (Fahrtkosten)
- accommodation costs (Übernachtungskosten)
- additional expenses for meals (Verpflegungsmehraufwand)
- additional travel expenses (Reisenebenkosten)
For each kilometre travelled (by car) you can deduct 30 cents with the kilometre lump sum (Kilometerpauschale) (outward and return journey). With a motorbike or scooter, 20 cents per kilometre are deductible. If you travel by public transport, you need proof of your journeys by train, bus and taxi. However, the costs are fully deductible.
There is no lump sum for accommodation costs: You can deduct the actual costs incurred (without meals, e.g. in the case of half board). You have to keep the hotel bill and prove it to the tax office.
Additional expenses for meals
There are 2 lump sums for additional expenses for meals during business trips, depending on the duration of your absence: If you are away for more than 8 hours, you can claim 14 euros. If you are away for more than 24 hours, you can claim a lump sum of 28 euros for your meals.
Additional travel expenses
Additional travel expenses are e.g. costs for business phone calls, parking, tips or luggage storage. If you do not have receipts, you can make out your own receipts (Eigenbeleg). Always note the date, place, service and cost amount.
Note: For business trips abroad, different lump sums apply depending on the country you are travelling to. For each country, there is a lump sum for the additional cost of meals (Verpflegungsmehraufwand) and a lump sum for your overnight expenses (Übernachtungskosten).
In this letter from the Federal Ministry of Finance (Bundesfinanzministerium) you will find the current lump sums for 2021.
3. Work equipment (Arbeitsmittel)
Work equipment that you purchase mainly (more than 90%) for professional purposes can be deducted in full as income-related expenses.
If you also use the equipment for private purposes, you have to calculate the work-related part, which you can then deduct. There is a lump sum of 110 euros for work equipment, for which no proof is required. If the purchase exceeds 110 euros, you need receipts as proof.
Work equipment up to a value of 952 euros (incl. VAT) is fully tax deductible in the year of purchase. If the item is more expensive, it can be written off over several years (Abschreibung).
Of course, the items can only be tax deductible if your employer does not cover the costs.
Typical examples for work equpment are:
- Work clothes
- PC, notebook, smartphone
- Workplace equipment (desk, office chair, book shelf)
4. Job-related relocations
The costs of job-related relocations are tax deductible as income-related expenses. Travel costs are deductible, as are transport costs, estate agent fees and double rent payments. There is a lump sum for moving expenses for parts of the costs (Pauschale für sonstige Umzugskosten). From 1 June 2020, the lump sum is 860 euros for the eligible person and 573 euros for each additional person moving with them (civil partner and children).
5. Maintenance of two households (doppelte Haushaltsführung)
If you run a second household due to your job, you can deduct a large part of the costs for your second home, e.g.:
- Rent and additional rental costs (Miete und Nebenkosten)
- Tax for the secondary residence (Zweitwohnsitzsteuer)
- Furniture and other furnishings
- Travel costs between primary and secondary residence
Note: Since 1 June 2020, the broadcast fee for the secondary residence has been waived if a broadcast fee is already paid for the primary residence. Important: You must submit an application for exemption!
- The secondary residence is established for professional reasons.
- The workplace can be reached at least 30 minutes faster from the secondary residence.
- You contribute at least 10% of the costs for the primary residence.
- The main residence is your primary centre of life.
6. Contributions to professional organisations and trade unions
Contributions to professional organisations (Berufsverbände) and trade unions (Gewerkschaften) are fully deductible as income-related expenses.
7. Professional insurances
Any insurance that covers a professional risk can be claimed as income-related expenses. This category includes, for example, professional liability insurance (Berufshaftpflichtversicherung), accident insurance (Unfallversicherung) (for accidents that occur in a professional context) or legal expenses insurance (Rechtsschutzversicherung) (professional part).
Note: Insurances that cover a private risk (health insurance, private long-term care insurance, life insurance, private liability insurance, legal expenses insurance, etc.) are not included here, but can be declared as special expenses.
8. Telephone and internet costs
If a private telephone or private internet access is also used for professional purposes, part of the expenses can be claimed against tax. Without proof, 20 % is recognised, but not more than € 20 per month.