(2021) Accident costs covered by the travel allowance?

The law stipulates that "the travel allowance covers all expenses incurred for journeys between home and the primary workplace" (§ 9 para. 2 sentence 1 EStG). This includes all "ordinary" costs, such as expenses for fuel, tyres, inspections, car insurance, car tax, depreciation, garage rental, repairs due to normal wear and tear, parking fees for parking the vehicle during working hours, financing costs, membership fees for motoring associations, insurance premiums for passenger accident protection, special leasing payments, replacement engines. Does this also apply to "extraordinary" costs such as accident damage?

A recurring issue is whether the costs of an accident are covered by the travel allowance or whether they can be deducted as business expenses in addition to the actual amount.

The tax authorities have repeatedly instructed tax offices: "Accident costs incurred on a journey between home and the primary workplace or on a family journey home to be taken into account are to be considered as extraordinary expenses within the framework of general business expenses according to § 9 para. 1 sentence 1 EStG in addition to the travel allowance" (most recently BMF letter dated 31.10.2013, BStBl. 2013 I p. 1376, no. 4).

The explanatory memorandum to the amendment of § 9 para. 2 EStG from 2007 also states that "accident costs are to be considered as extraordinary expenses in addition to the travel allowance" (BT-Drucksache 16/12099 dated 03.03.2009, pages 6 and 8).

Furthermore, the income tax guidelines explicitly state that "in addition to the travel allowance, only expenses for the repair of accident damage in the event of a traffic accident on a journey between home and workplace, on a detour to refuel the vehicle, on a detour to pick up carpool passengers" are to be taken into account (note 9.10 LStH 2018).

In addition, the Federal Government recently stated: "The travel allowance covers all expenses incurred by the employee for journeys between home and the primary workplace. A distinction between ordinary and extraordinary expenses is not provided for in the wording of § 9 para. 1 sentence 3 no. 4 sentence 2 EStG. For reasons of fairness, however, the administration does not object if expenses for the repair of accident damage in the event of a traffic accident are claimed as business expenses in addition to the travel allowance" (BT-Drucksache 18/8523 dated 20.05.2016, page 35).

The Federal Fiscal Court has recently ruled against taxpayers that the travel allowance in principle also covers accident costs, insofar as they are expenses incurred by the employee for "journeys between home and the primary workplace", i.e. actual travel costs (BFH ruling dated 19.12.2019, VI R 8/18).

The BFH justifies this with the wording of the law, which extends the effect of the travel allowance to "all expenses" in § 9 para. 2 sentence 1 EStG. In addition to environmental and transport policy considerations, the travel allowance, which is independent of the means of transport, also serves to simplify taxation. By covering "all expenses", legal disputes between taxpayers and the tax office over the consideration of special costs, e.g. for pick-up journeys and extraordinary costs, should be avoided.

However, the effect of the travel allowance only extends to "expenses for journeys between home and the primary workplace" and for "family journeys home within the framework of double housekeeping", i.e. vehicle and route-related expenses. Other expenses, in particular expenses related to the elimination or alleviation of physical injuries incurred in an accident on a work-related journey between home and the primary workplace, are not covered by the effect. Such expenses can be deducted in full as business expenses (please also note the following article).

Tip: Disabled people with a degree of disability (GdB) of at least 70 or a GdB of 50 to 70 and the mark "G" or "aG" can claim their journeys to work with the business travel allowance of 30 cents per kilometre or with the actual km cost rate. Therefore, they can also deduct accident costs as business expenses (BMF letter dated 31.08.2009, BStBl. 2009 I p. 891, para. 3).

You should also be aware of another special feature:

If a taxpayer has an accident on the way between home and the primary workplace, they can deduct the medical expenses caused by the accident as business expenses. Such medical expenses are not covered by the effect of the travel allowance (BFH ruling dated 19.12.2020, VI R 8/18).

The effect of the travel allowance only extends to "expenses for journeys between home and the primary workplace" and for "family journeys home within the framework of double housekeeping", i.e. vehicle and route-related expenses. Other expenses, in particular expenses related to the elimination or alleviation of physical injuries incurred in an accident on a work-related journey between home and the primary workplace, are not covered by the effect. Such expenses can be deducted in full as business expenses.

Expenses related to the elimination or alleviation of physical injuries do not constitute occupational mobility costs. They are not expenses for journeys between home and the primary workplace.

This also applies if the physical impairment for which the expenses are incurred occurred on a work-related journey between home and the primary workplace. Expenses for the elimination or alleviation of physical injuries are neither vehicle nor route-related.