(2022) Legal position on first degree and tax deduction of expenses

An "undergraduate degree" is pursued as initial training, typically immediately after completing secondary education. In this case, study costs can only be deducted as training costs up to a limit of 6.000 Euro as special expenses.

If a first degree is undertaken after completing vocational training, the costs can be deducted in full as - previously incurred - income-related expenses (BFH ruling of 18.6.2009, BStBl. 2010 II p. 816).

If the first degree is part of a training employment relationship, the expenses can be deducted in full as income-related expenses, as the training remuneration is taxable, e.g. vocational academies, dual study programmes.

In the case of a first degree, study costs can be unlimited income-related expenses in the following cases (BMF letter of 22.9.2010, BStBl. 2010 I p. 721):

• If two or more degree programmes are started in parallel and completed at different times, the second degree programme is considered a second degree after the first degree has been completed, meaning that expenses can be considered as income-related expenses from that point onwards.
• A professional qualification is considered to be the first state examination, which provides the professional qualification for a preparatory service. Therefore, expenses for the legal clerkship for lawyers and trainee teachers after the first state examination can be deducted in full as income-related expenses.
• The Bachelor's degree is also considered a professional qualification from a first degree. A subsequent degree programme is a second degree, so these expenses can be deducted in full as income-related expenses. This mainly applies to a Master's degree, as it cannot be undertaken without a completed Bachelor's or other degree.

After many years of uncertainty, the Federal Constitutional Court has declared the current legal regulation to be constitutional. The fact that expenses for initial vocational training or a first degree as initial training cannot be deducted as income-related expenses does not violate the Basic Law (BVerfG decision of 19.11.2019, 2 BvL 22/14, 2 BvL 23/14, 2 BvL 24/14, 2 BvL 25/14, 2 BvL 26/14, 2 BvL 27/14, published on 10.1.2020).