(2021)
What should I know about the new 48-month limit?
For off-site work, travel, accommodation, and incidental travel expenses, as well as meal allowances, can be deducted as business expenses.
Since 2014, a new 48-month limit has played a significant role.
(1) The 48-month limit in determining the first place of work
"First place of work" is a fixed business location of the employer to which the employee is permanently assigned. Even without an explicit determination by the employer, a permanent assignment is assumed if the employee is to work at a location for an extended period. This is the case for employment
- indefinitely ("until further notice"),
- for the entire duration of the employment contract (fixed-term or indefinite) or
- for a period of more than 48 months.
TIP: This means: All assignments (transfers, secondments, postings) that are initially limited to a maximum of 48 months do not establish a "first place of work" but rather off-site work. Therefore, travel costs can be deducted with the business travel allowance or with the actual costs, as well as meal allowances and accommodation costs as business expenses or reimbursed tax-free by the employer.
(2) The 48-month limit for work at a customer's premises
Unlike in the past, an employee can now have their "first place of work" at a customer's premises of their employer, but only for long-term work. This applies, for example, to employees who work on a long-term project at the customer's site or temporary workers who work for the hirer without a time limit.
Such long-term work exists if the employee works at a customer's premises or a related company
- from the outset for more than 48 months or
- for the duration of the employment contract.
(3) The 48-month limit for accommodation costs
For overnight stays during off-site work, only the actual costs can be deducted as business expenses. Since 2014, accommodation costs can only be deducted in full or reimbursed tax-free by the employer for a period of 48 months.
From the 49th month, the deduction of business expenses or tax-free reimbursement is limited to comparable expenses for double housekeeping, i.e. to a maximum of 1.000 Euro per month. This limit only applies to off-site work in Germany, not abroad.
Tipp
The 48-month period starts anew if the work at the same place of work is interrupted for at least 6 months. The reason for the interruption (e.g. illness, holiday, work at another place of work) does not matter.
Currently, the Münster Finance Court has confirmed the tax authorities' view and ruled that repeatedly limited assignments to a construction site of less than 48 months each do not establish a "first place of work" there, even if the assignment lasts continuously for more than four years (Münster Finance Court, 25.03.2019, 1 K 447/16).
Special case for temporary workers:
Temporary workers are not employed by the company where they are deployed but by "their" temporary employment agency, often referred to as the "lender". If these employees are "lent" to a specific company for a certain period, the question arises whether they can deduct their travel to the place of work according to travel cost principles (30 cents per kilometre travelled) or only with the lower commuting allowance (30 cents per kilometre).
In principle, travel costs can only be claimed with the commuting allowance if the temporary worker is permanently assigned to a place of work. This is the case if they are to work there for an extended period, namely
- indefinitely ("until further notice"),
- for the duration of the employment contract or
- for a period of more than 48 months.
This means: Temporary workers can also have their "first place of work" at the customer's site if they work there for an extended period. However, this is only the case if the employee is to work there from the outset (!) for more than 48 months or for the duration of the employment contract or indefinitely. Travel is then only deductible with the commuting allowance, meal allowances and incidental travel expenses are not taken into account. Temporary workers who work at customers' premises for a shorter period, on the other hand, are engaged in off-site work and can therefore claim their travel with the business travel allowance - and to a certain extent also meal allowances.
Currently, the Lower Saxony Finance Court has ruled that an employee in a permanent employment relationship with a temporary employment agency can only claim travel costs with the commuting allowance for their journeys between home and place of work, even if the temporary employment agency has agreed on a fixed term of employment with the respective hirer of the employee (judgment of 28.05.2020, 1 K 382/16).
- The case: The claimant was in a permanent employment relationship with temporary employment agency A. The claimant was then deployed exclusively and continuously at company B from the start of the contract as agreed. The claimant's temporary employment relationship was limited according to the agreements between A (lender) and B (hirer). The further deployment at the company thus depended on B establishing another (fixed-term) temporary employment relationship with A after the expiry of the respective period. This continued beyond the year in dispute, 2014. In the year in dispute itself, the claimant was initially employed from 01.01. to 30.09. and then from 01.10. to 31.12. as part of a fixed-term temporary employment relationship between A and B. In his tax return, the claimant claimed travel costs of 30 cents per kilometre travelled, i.e. according to travel cost principles, for his journeys from home to his place of work at B. The tax office rejected this and only considered the commuting allowance. The court dismissed the appeal against this.
- Reasoning: The claimant had his first place of work at his place of work at B. He was permanently assigned to this place of work. This is not a case of so-called chain secondments. The claimant was employed for an assignment at B and was deployed exclusively there. This assignment was designed from the outset, based on the overall circumstances of the individual case, to be indefinite, i.e. not fixed-term, for both the claimant as an employee and A as an employer. The temporary employment relationship between A and B was indeed fixed-term. However, this is not relevant in the case in dispute. In the end, the claimant's deployment at B depended on B continuing the temporary employment relationship after the expiry of the period agreed with A. This did not differ from many employees whose deployment depends, for example, on the employer's order situation. For the assumption of a permanent assignment of the claimant to the first place of work at B, it is also irrelevant that, according to the employment contract, an assignment to other customers of A was (theoretically) possible. Again, the claimant's employment relationship does not differ significantly from those employment relationships where the employer is not a temporary employment agency.
Tipp
In its judgment of 10.04.2019 (VI R 6/17), the Federal Finance Court stated that the existence of a fixed-term temporary employment relationship does not preclude the assumption of a permanent assignment. However, it did not have to decide the case specifically, as in the previous case, the employee was assigned to two different places of work in succession during their employment. This was not the case in the current situation, as the claimant was only employed at company B and was also hired by the temporary employment agency specifically for this purpose. In any case, the Federal Finance Court is now involved again, as the appeal is pending (Ref. VI R 32/20). Affected temporary workers should therefore appeal against negative tax assessments and request a suspension of their own proceedings.
