Tax deduction of a home office
von Peter Scheller
Self-employed people as well as employees may work some of the time or permanently from home. This raises the question of whether and when expenses for a home office are tax deductible in Germany and if so, what kind of expenses are valid.
The term home office is not defined in law but rather clarified by the ruling of Germany’s highest fiscal court. A home office is a room within the domestic accommodation which is designed and equipped for work of intellectual, literary, administrative or organizational nature. This room has to be used almost exclusively for business or professional purposes. A private use of this room of more than 10% results in the non-deductibility of expenses. Rooms where functions or facilities such as work or repair shops, medical practices, official offices etc. are typically undertaken are not considered to be a home office.
The expenses for a home office can be deducted up to 1,250 Euro per year if there is no other workplace at the disposal of the employee or the self-employed person. This means that employees can only deduct expenses for a home office if their employers do not provide them with a workplace in their formal offices. If the home office constitutes the center of business or professional activities of the taxable person the expenses can be deducted without any restriction. If a person is working away from home as well as in the home office, he or she has to perform the main activities or work at the home office in order to achieve full tax deductibility of respective expenses. Self-employed persons who perform most of their work from home are able to deduct respective expenses without any restrictions. However, the taxable person has to prove to the tax authorities that the before mentioned criteria are fulfilled.
Expenses for offices or workplaces outside the own domestic home are fully deductible.
Deductible items are all expenses connected to the home such as rents, heating, electricity, utilities, property management fees, real estate tax, insurance premiums, repairs etc. If the home office is situated in a house which is owned by the taxable person depreciations on the building can be deducted as well. The before mentioned costs have to be split-up proportionately. The criteria of division are the square meters of home office divided through by the square meters of the whole house or flat (living areas).
However, even if the tax office does not accept the existence of a home office, expenses for working materials and office equipment such as work desk and chair, IT equipment, telecommunication equipment, filing cabinets, waste paper basket, professional publications etc. can be deducted.
Author: Peter Scheller, Steuerberater, Master of International Taxation, Fachberater für Zölle und Verbrauchsteuern