Deduction of income-related expenses – Rental – Home office to the employer

The full deduction of income-related expenses

for a home office can generally only be considered if it forms the center of the entire business and professional activity; if no other workplace is available for the activity, the expenses can only be deducted up to €1,250 per year. Until now, it was possible to achieve the full deduction of income-related expenses by renting out the home office from the employee to his employer, which was recognized for tax purposes.

A tax deductible rental

only exists if the employer has a predominant business interest, so that the rental payments do not constitute wages, but income from renting and leasing. For this purpose, among other things, a corresponding written agreement should be concluded. As a rule, however, an interest of the employer cannot be assumed if the employee has another job in the company.

The financial management

has so far assumed the existence of the intention to generate income in these cases, thus allowing the expenses to be taken into account for tax purposes even if they exceed the income on a sustained basis. In a recent decision, however, the Federal Fiscal Court denied the general intention to generate surplus income in such cases; this must always be proven in the individual case. As a result, the deduction of income-related expenses is now only possible in the event of a positive surplus forecast. It is irrelevant whether the premises are located in or outside the employee’s private residence.

(Further comments & information on this can be found in our information letter 10/2018 under item 4.)