Therapy costs are tax-deductible as business expenses – the case of burnout

Many people suffer from burnout. It is a psychosomatic condition characterized by symptoms such as exhaustion and low mood. Experts refer to it as a psychophysical exhaustion syndrome. Since the number of people affected is rising due to influences and demands from the workplace and the professional world, the question arises as to whether the costs of psychosomatic treatment can be claimed as income-related expenses. Your tax advisor from Düsseldorf and Oberhausen explains the diagnosis of “burnout” from a tax law perspective.

Burnout is generally not classified as an occupational disease, as it can affect people from all walks of life, regardless of whether they are employed. However, stressors such as time pressure, lack of appreciation, bullying, poor leadership, and similar factors can trigger and contribute to the condition. Since burnout, like depression, is treated medically, it should be taken seriously. And it is important to note that the condition can definitely be triggered by one’s job, even if it is not an occupational disease per se. For this reason, the issue raises the question of whether the costs of psychosomatic treatment can be claimed as income-related expenses.

1. Ruling: Burnout Treatment Not Recognized as Income-Related Expenses

In November 2015, the Federal Fiscal Court ruled that the costs of several weeks of treatment at a psychosomatic clinic are not deductible as income-related expenses. The decisive factor in this case was that the condition was a mental and psychosomatic illness triggered by severe emotional stress, rather than a “typical occupational disease.” Based on this conclusion, the judges found no direct link between the illness and the employee’s work. The symptoms had already existed prior to the work-related event and had intensified afterward. Furthermore, it could not be proven that the employee suffered from burnout due to work or was subjected to workplace bullying.

The 2015 Case

Acute health problems arise when, contrary to expectations, the department head is not appointed as an authorized signatory but is passed over for promotion. He perceives this situation as a demotion. Through his family doctor, and in consultation with a psychiatrist, he was referred to a psychosomatic clinic for inpatient treatment. The health insurance provider refused to cover the costs, even though medical certificates were provided, arguing that inpatient care was not necessary. The tax office also denied the tax exemption.

Direct connection to events at work

From a tax perspective, the situation changes if a clear connection between the burnout and the professional activity can be established. Although proving this connection is difficult in cases of psychosomatic illnesses. People from all walks of life can be affected by the condition. The illness can develop independently of one’s employment. However, if the burnout has its roots in a work-related context, the situation is different. This is the case, for example, if a person is bullied at work and becomes ill as a result. If a medical certificate is submitted to the tax office stating that the burnout is attributable to workplace bullying, there is a chance that the costs can be claimed for tax purposes.

2. Ruling: Burnout Treatment Recognized as Income-Related Expenses

In August 2012, the Rhineland-Palatinate Tax Court recognized the costs of two stays at a private clinic for psychotherapy and psychosomatic health development as income-related expenses. Workplace bullying was the trigger for the illness. The conflict was protracted and of a psychosocial nature. The diagnosis was a “chronic psychophysical state of exhaustion with depressive development.” In this case, the connection between the illness and the employee’s work is established, and the medical costs are exclusively work-related.

The 2012 Case

The employee developed a mental illness due to what he perceived as years of “bossing” by his supervisor. As a result, he was dependent on the help of specialists. His primary care physicians certified that the conflict arose exclusively from work-related conflicts and situations of excessive stress. The conflict situation was long-standing and the sole trigger for the burnout. The actual circumstances of this case play less of a role than his subjective perception. The decisive factor is that the illness was objectively triggered by the work situation. Furthermore, the treatment was carried out, in the broadest sense, to support his professional life—namely, to help him cope with the conflict situation.

3. Ruling: Burnout treatment not recognized as income-related expenses

In June 2007, the Lower Saxony Finance Court rejected a claim for income-related expenses. The judges ruled that such medical expenses are not deductible as income-related expenses.

The 2007 Case

It could not be conclusively determined whether the supervisors had engaged in bullying in this case. The measures described were in no way taken solely to harm the employee personally. The ongoing illness was attributable to the plaintiff’s underlying predisposition. This predisposition was responsible for both the onset and the course of the illness. While the career change, her career break, and her professional disappointments did influence the plaintiff, it was rather her general lifestyle that was inextricably intertwined with the circumstances of the illness. The deduction of income-related expenses was thus ruled out.

Recent Developments Regarding Burnout

Burnout has been recognized as a disease by the World Health Organization (WHO). The new classification list, known as ICD-11, has been in effect since January 1, 2022. The syndrome has been on the rise for years, and discussions regarding its classification as a distinct illness have been ongoing for some time. The WHO’s decision reflects this. Burnout is now included in the new international catalog for the classification of diseases. This means that burnout, as a disease triggered by chronic stress in the workplace, can be officially diagnosed and treated.

The previous WHO catalog had been in use since the early 1990s, along with the international classification system. Over the past decade, cases of work disability due to a burnout diagnosis have tripled. In 2017, there were approximately 166,000 people affected in Germany. Burnout was not yet considered a disease. The ICD catalog now lists burnout as a syndrome resulting from “workplace stress that cannot be successfully managed.” Furthermore, the condition is categorized into three dimensions: A feeling of exhaustion, increasing emotional detachment or a negative attitude toward one’s job, and reduced professional performance.

It is particularly significant that the WHO notes that the term “burnout” should be used exclusively in a professional context and not for experiences in other areas of life.

The recognition of burnout in the “International Statistical Classification of Diseases and Related Health Problems” (ICD) is particularly important for the argumentation when applying for a disability pension. This should make the process easier, provided the requirements for disability are met. As a result, costs borne by the individual may be more easily recognized as income-related expenses.

Tax Consulting in Düsseldorf and Oberhausen

Do you have a question or concern regarding income-related expenses? The team at Trimborn . Partner can assist you as quickly as possible with our many years of experience and professional expertise. Are you looking for a tax advisor? Then contact us. At our offices in Düsseldorf and Oberhausen, we are happy to assist you with all your tax-related matters.