Business expenses: Expenses related to your job

As an employee, you not only have income but also various expenses that must be covered in order to do your job. The daily commute to work or even work clothes can quickly become very expensive. The government is aware of this and responds to these burdens with tax relief. In this article, our tax advisors in Düsseldorf and Oberhausen explain what “income-related expenses” are all about.

What are income-related expenses?

All expenses related to your job are called income-related expenses. These expenses can be deducted on your tax return. The law defines income-related expenses as:

“Expenses incurred to acquire, secure, and maintain income.” (§ 9 EstG)

These expenses may be deducted from your income as income-related expenses. Consequently, you only pay taxes on the remaining amount.

But not everyone can benefit from this rule. You can only claim income-related expenses if you:

1. an employee
2. Receive a pension
3. Receive interest from investments at a bank
4. Collect rent from a rental property
5. have other income that does not arise from self-employment

The benefits of income-related expenses therefore do not apply to self-employed individuals and business owners. Income-related expenses are particularly relevant for all employees. That is why our tax advisors have focused on income-related expenses for employees in this article. For employees, income-related expenses are reported in Schedule N of the tax return

Which expenses count as income-related expenses?

1. Commute

Commuting expenses can be deducted from taxes. It doesn’t matter whether you use your own car or public transportation. You can even save on taxes as a passenger in a carpool. There are two ways to claim the commute to work. The distance can be claimed using a mileage allowance (€0.30 per kilometer). A maximum of 4,500 euros can be claimed annually as a mileage allowance. Alternatively, the full amount of travel expenses can be claimed. In this case, the tax office requires appropriate documentation, such as train tickets.

2. Continuing Education and Retraining

In many professions, continuing education is important for long-term success. Fortunately, both continuing education and retraining count as income-related expenses. They can be claimed in full for tax purposes.

3. Business trips

Depending on your industry, business trips may be part of your daily routine. Under the business travel allowance, both the outbound and return trips can be claimed at a rate of 0.30 euros per kilometer each.

4. Relocations

If you have to move for your job, the costs are tax-deductible. You can claim travel expenses and costs for moving companies, real estate agent fees, or potential double rent payments. Alternatively, the tax office grants flat-rate moving allowances without requiring documentation.

5. Second home

If you need a second home for professional reasons, many of the costs can be deducted. However, the double household allowance may only be claimed if this makes your workplace at least 30 minutes faster to reach and your primary residence remains your center of life. You can deduct, for example:

• Rent and utilities
• Furnishings
• Second home tax
• Broadcasting license fee
• Travel between primary and secondary residences
• Work equipment

Items used primarily for professional purposes may be deducted as income-related expenses. If a single, independently usable, movable, and depreciable work tool does not exceed the amount of 952.00 euros, it may be fully deducted. Typical work tools include:

• Work clothing
• Briefcases
• PC, laptop, or smartphone
• Software
• Professional literature
• Tools
• Professional insurance

Many employees have insurance to cover occupational risks. Professional liability insurance, occupational accident insurance, or legal protection insurance (labor law) can be claimed as income-related expenses.

Note: If your employer has already reimbursed certain costs, you must always report this separately on your tax return.

The flat-rate deduction for income-related expenses

Of course, not all employees have high expenses due to their profession. But even if you don’t incur typical expenses in your case, you can still benefit from potential tax savings. The government offers a flat-rate allowance for income-related expenses of 1,000 euros per year. This allowance is independent of actual expenses and is available to every employee equally.

The tax office automatically takes the allowance into account. No supporting documents or details are required in the tax return. However, many employees have higher work-related expenses and should therefore report these in their tax return.  

Income-related expenses: Take full advantage of tax savings

For employees, income-related expenses can mean significant tax savings. We have highlighted some of the most common income-related expenses in this article. Nevertheless, there are many other expenses incurred in specific professions that can also be claimed as income-related expenses. That’s why a consultation with a tax advisor is always a good idea to maximize your tax savings. As tax advisors in Düsseldorf and Oberhausen, we are familiar with various industries and can offer you the highest quality of advice. Together with you, we’ll identify potential tax savings. So, do you have any questions about income-related expenses? We look forward to hearing from you! Schedule a consultation and visit us in Düsseldorf or Oberhausen. Our tax advisors look forward to meeting you.