(last update: 18 May 2020)
Below, we are providing you with an overview of the tax aspects of "remote working" from a home office.
1. (Flat-rate) deduction of income-related expenses for telephone and internet costs by the employee
For reasons of simplification, the tax authorities recognize without individual proof up to 20% of the invoice amount, up to a maximum of EUR 20 per month, as flat-rate income-related expenses for work-based telecommunication expenses. This includes both the basic fees for internet and telephone connections as well as connection charges. Accordingly, a total flat rate of 20% can also be deducted (Regulation 9.1 (5) German Wage Tax Regulations [Lohnsteuerrichtlinien - LStR]).
In times of increased work-related use, e.g. when working from a home office, higher income-related expenses may be claimed if proven through suitable documentation (R 9.1 (5) sentence 2 LStR). Conceivable in this context, in particular, is a list of the days on which the employee worked from his home office. At best, the employer provides additional confirmation.
In the case of privately purchased end devices which are used more than insubstantially for work purposes, half of the use can automatically be assumed to be work-related (German Federal Fiscal Court [Bundesfinanzhof - BFH] judgment of 19 February 2004 - VI R 135/01, German Federal Gazette [Bundessteuerblatt - BStBl.] II 2004, 958). Accordingly, it is also possible to deduct half of the acquisition costs for this as income-related expenses spread over three years.
2. Reimbursement of expenses for telephone and internet costs by the employer
As an alternative to the deduction of income-related expenses, a tax-free reimbursement of expenses by the employer is conceivable under § 3 No. 50 German Income Tax Act [Einkommensteuergesetz - EStG]. Here, the same principles apply as to the deduction of income-related expenses (R 3.50 (2) sentence 4 LStR: a flat rate of 20%, a maximum amount of EUR 20 per month; a higher reimbursement only with concrete specification of the expenses). Employees are free to claim a higher deduction of income-related expenses in their tax returns. However, this also requires proof of a higher work-related use. The declared higher costs are then reduced by the tax-free reimbursement of expenses (R 9.1 (5) sentence 6 LStR). If the employee does not assert this claim, the tax authorities are likely to assume that actual income-related expenses were incurred in the amount of the tax-free reimbursement of expenses.
In addition, the employer can also reimburse the costs of internet access without making any further examination of the work-related volume and pay the tax thereon to its detriment at a flat-rate of 25% (§ 40 (2), sentence 1, No. 2, sentence 2 EStG). Up to an amount of EUR 50, a declaration by the employee is sufficient for this. Up to this amount, there is no offsetting against the employee's income-related expenses either (R 40. 2 (5) sentence 12 LStrR.
3. Telework / proportionate housing costs
Given the current special circumstances, it is also possible that, under further conditions, employees could be able to claim income-related expenses in connection with a home office for the duration of the home office activity and office "closure". In principle, a deduction of home-office costs is not possible if a workplace is available at the employer.
If this workplace is not available due to a "health hazard", however, the costs for the ("spatially separate") home office can be claimed up to a maximum amount of EUR 1,250 per year for the months of use during the hazard-related office closure (BFH judgment of 26 February 2014 VI R 11/12, BStBl. II 2014, p. 674; BMF letter of 6 October 2017, BStBl. I 2017, p. 1320, marginal No. 17).
In our view, this should also apply to the currently relevant cases where, in order to prevent the further spread of coronavirus, work from home is being ordered by the authorities or by the employer.
If such costs are claimed in the income tax return for 2020, a short explanation making reference to coronavirus and the aforementioned BMF letter should be attached.
If work is carried out from a home of one's own, claiming the costs for the home office could have negative tax consequences in the event of the sale of the property. If a property is acquired within ten years and sold again (at a profit), there is a risk of proportional taxation of the capital gain in relation to the study room. The German lower fiscal courts currently have different opinions on this issue, but an appeal is currently pending before the Federal Fiscal Court (Case No. IX R 27/19). If one considers a lucrative sale of the home to be possible in the foreseeable future, one should therefore possibly waive the assertion of the study in the tax return.
4. Provision of mobile end devices or PCs free of charge
The private use of mobile end devices (smartphone, tablet, notebook or PC) provided by the employer is tax-free in accordance with § 3 No. 45 EStG.
If ownership of the mobile end devices, PCs or other devices for accessing the internet is to be transferred to the employees, the employer could tax the pecuniary advantage at a flat rate of 25% (§ 40 (2) sentence 1, No. 5, sentence 1 EStG).