{"id":852,"date":"2020-07-15T15:28:47","date_gmt":"2020-07-15T13:28:47","guid":{"rendered":"http:\/\/www.accountable.de\/?p=852"},"modified":"2023-12-20T14:14:39","modified_gmt":"2023-12-20T13:14:39","slug":"7-handy-tax-deductions-for-freelancers-in-germany","status":"publish","type":"post","link":"https:\/\/www.accountable.de\/en\/blog\/7-handy-tax-deductions-for-freelancers-in-germany\/","title":{"rendered":"7 handy tax deductions for freelancers in Germany"},"content":{"rendered":"\n

Self-employed professionals in Germany are entitled to deduct a range of business expenses when it comes time to file income tax returns. Learn about the key deductions and what you can get away with.<\/strong><\/span><\/p>\n\n\n\n

Just like in many other countries, as a freelancer in Germany, you can deduct a number of expenses when calculating your annual income, in order to reduce your tax burden. The more business costs you can deduct, the smaller your income tax bill.<\/span><\/p>\n\n\n\n

So what can you reasonably deduct as an expense? Read on for our recommendations.<\/span><\/p>\n\n\n\n

Receipts and auditing <\/h2>\n\n\n\n

Just before we launch into the list of deductions, a note about receipts:<\/span><\/p>\n\n\n\n

To<\/span> claim an expense, you must have a receipt for the purchase. This is also sufficient for making a VAT claim. The German tax authorities can decide to audit your business several years after a financial year has passed. To be on the safe side, save all financial records, including receipts, for at least five years.<\/span><\/p>\n\n\n\n

Deductions for office costs <\/h2>\n\n\n\n

You can deduct the cost of renting an office or coworking space from your tax liability, as well as any associated costs, like electricity and internet. <\/span><\/p>\n\n\n\n

But things get a little more complicated when it comes to the home office.<\/span><\/p>\n\n\n\n

Home office tax deductions in Germany\u00a0<\/strong><\/span><\/h2>\n\n\n\n

In Germany you can have tax deductions for your home office. You are allowed to deduct a portion of your at-home costs, including telephone, internet, heating, electricity and rent. The amount you can deduct is relative to the size of your office. For example, if your office takes up one quarter of the total space of your apartment, you can claim one quarter of your costs as business expenses.<\/span><\/p>\n\n\n\n

Up till now, it has only been possible to do this if your office is in a separate room \u2013 not, for example, in one corner of your bedroom. In Germany, a separate room is defined as being a space surrounded by walls, with its own door. The Finanzamt has been known to ask for proof of freelancers\u2019 home office setups, so it\u2019s best not to fudge it.<\/span><\/p>\n\n\n\n

Home office allowance <\/strong><\/span><\/h2>\n\n\n\n

Due to the Corona crisis, many more people are working from home, both as freelancers and employees. This has prompted a discussion about the costs of working from home, with many people pushing for further deductions to be permitted for those working from home.\u00a0<\/span>The result is the home office allowance (Homeoffice Pauschale): <\/p>\n\n\n\n

Starting from 2023, you are eligible to claim \u20ac6 for each day spent working in your home office. Nonetheless, there exists an annual cap of \u20ac1,260. Thus, even if your home office days exceed 210, the maximum deductible amount remains at \u20ac1,260.<\/p>\n\n\n\n

\u27a1\ufe0f Here you find all details about the Home office allowance in Germany!<\/a> <\/p>\n\n\n\n

Deductible costs for food and drink<\/strong><\/span><\/h2>\n\n\n\n

Getting a bite to eat with a client, a coffee with someone you\u2019re interviewing, or a drink with a potential business partner? These are deductible expenses because they are a necessary part of getting your work done.<\/span><\/p>\n\n\n\n

And what\u2019s more, in Germany food and drink are charged with VAT, which means you can deduct these costs from your VAT returns, as well. Whenever you are making an income tax deduction on an item that includes VAT, you can also deduct it from your VAT bill.<\/span><\/p>\n\n\n\n

\ud83d\udca1Tip from Accountable:<\/strong> Just don\u2019t fall into the trap of deducting meals that aren\u2019t work-related: apparently German tax office auditors are all too familiar with freelancers attempting to deduct expensive meals that just happen to have taken place on their birthdays.<\/span><\/p>\n\n\n\n

Be sure to ask the waiter for a <\/span>Bewirtungsbeleg<\/span><\/i> \u2013 this is the only form of receipt accepted by the Finanzamt. It is common practice to write the names of the people present and the reason for your meeting. That way, if you do end up being audited, you won\u2019t need to try and remember who you had a Schnitzel with on a September evening in August 2017.<\/span><\/p>\n\n\n\n

\ud83d\udca1 Tip from Accountable: <\/strong>Need to quickly check an expense? Type your expense into Accountable\u2019s nifty deductibles search tool<\/a> and see if it\u2019s tax-deductible in seconds.<\/p>\n\n\n\n

Deductions for German classes<\/strong><\/span><\/h2>\n\n\n\n

Learning the German language is almost guaranteed to support your working life here in Germany. For that reason, you can deduct the cost of your language lessons as an expense.<\/span><\/p>\n\n\n\n

Insurance deductions\u00a0<\/strong><\/span><\/h2>\n\n\n\n

The Finanzamt\u2019s income tax return will ask you for the total amount of health insurance you paid during the financial year, as well as any other public and private insurance you may have paid. These will all be deducted as part of calculating your taxable income.<\/span><\/p>\n\n\n\n

\ud83d\udca1 Accountable Tip:<\/strong> If you belong to the <\/span>K\u00fcnstlersozialkasse<\/span><\/a>, the German social security fund for artists, they will send you a letter at the end of each financial year summing up the total amount of health and care insurance you have paid, as well as how much you have paid into your pension scheme (<\/span>Rentenversicherung<\/span><\/i>).<\/span><\/p>\n\n\n\n

Keep a record of all insurance you have contributed to or purchased throughout the year. These may include:<\/span><\/p>\n\n\n\n