Expenses – Trainers – Instructors – Educators – Supervisors

Revenue

are employed as exercise instructors, trainers, educators, supervisors or from artistic activities or the care of elderly, sick or disabled persons to to the amount of 2.400 Euro tax freeif the activity part-time and is carried out in the service or on behalf of a legal entity under public law or a non-profit organization (so-called exercise leader allowance, cf. Section 3 No. 26 EStG). Expenses in this connection may only be taken into account for tax purposes if they exceed the tax-exempt amount. It is questionable how to proceed if the income is still below the tax-free amount but the expenses exceed the income.

The tax authorities did not consider a deduction of the expenses to be permissible because the expenses were exclusively related to tax-exempt income. The Federal Fiscal Court has contradicted this view. Accordingly, the expenses in this case can be deducted and the resulting loss can be offset against other positive income.

However, it should be noted,

that a consideration of losses is excluded if the practice leader activity represents itself as so-called Liebhaberei. This would be the case if it is not foreseeable, based on the nature and scope of the activity, that a total profit can be generated from it.

(Further comments & information on this can be found in our information letter 06/2018 under the item 2.)