Taxes – Deductibility of relocation expenses

Very interesting for expatriates who are working and living in or considering re-locating to Germany is the tax deductibility of  work-related relocation expenses.

Relocation expenses are work-related if

  • you are moving from abroad to Germany, starting a new job in Germany
  • the distance between home and workplace is significantly reduced i.e. traveling time shortened by at least one hour 
  • the relocation is caused by working for a new employer or starting a new job
  • a double household is set-up or terminated

Deductible are all removal/transport and travelling costs for the employee and his or her family. Deductible are also expenses for flights to search for a home in Germany. Additional expenses such as compensations for rental contracts, broker fees for procuring flat or home or in connection with childcare can be deducted. 

In addition there are special lump-sum deductions for 

  • international relocation outside of the EU i.e. USA, Switzerland etc.
  • international relocation within the EU
  • relocation in connection with returning to Germany

The lump sum for relocation outside the EU is currently amounting to 943,38 EUR and within the EU to 853,53 EUR. These amounts will be further increased for relocating family members.

The employer may reimburse those expenses free of tax. However, if the employer does not reimburse all relocation expenses, the employee is entitled to deduct additional costs in his or her German income tax return. In this case, a single proof of the actual removal costs must be provided.

We would be happy to assist you with our professional tax advice. 

Hans-Guenter Dillenburg
Diplom-Finanzwirt Steuerberater Partner

GINSTER THEIS KLEIN & PARTNER mbB

Wirtschaftsprüfer Steuerberater Rechtsanwalt

GTK Steuerberater (Berlin, Bonn, Bornheim, Brühl, Hamburg)

          

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