Are accident costs covered by the travel allowance?

Can accident costs be deducted in addition to the travel allowance?

In principle, the travel allowance covers all "ordinary" travel costs between home and the primary workplace (§ 9 para. 2 sentence 1 EStG). These include:

• Petrol, tyres, inspections
• Car insurance and tax
• Depreciation and repairs due to normal wear and tear
• Parking fees during working hours
• Garage rent, financing costs, leasing down payment
• Contributions to motorist associations, passenger accident insurance
• Replacement engine

But what about extraordinary costs – e.g. in the event of an accident?

Accident costs: Exception despite travel allowance?

There is often debate about whether accident costs can be deducted as business expenses in addition to the travel allowance. The tax authorities' answer is clear:

“Accident costs incurred on a journey between home and 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.”
(BMF letter dated 31.10.2013, BStBl. 2013 I p. 1376, no. 4)

The explanatory memorandum to the law on the amendment of § 9 para. 2 EStG from 2007 also confirms this view (BT-Drucksache 16/12099 dated 03.03.2009, pages 6 and 8).

Income tax guidelines clearly regulate exceptions

According to the income tax notes (note 9.10 LStH 2018), only certain accident costs may be considered in addition to the allowance:

• Accident on direct route to work
• Accident on a detour to refuel
• Accident on a detour to pick up carpool members

Government: No legal differentiation – but equity regulation

“The travel allowance covers all expenses incurred by the employee for journeys between home and primary workplace. A differentiation 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 equity, however, the administration does not object if expenses for the repair of accident damage in a traffic accident are claimed as business expenses in addition to the travel allowance.”
(BT-Drucksache 18/8523 dated 20.05.2016, page 35)

BFH ruling 2019: Bad news – but overturned

The Federal Fiscal Court (BFH) ruled on 19.12.2019 (VI R 8/18) that the travel allowance generally also covers accident costs incurred on the way to work.

However, the Federal Ministry of Finance disagrees with this view and states in the BMF letter dated 18.11.2021:

Accident costs incurred on journeys between home and primary workplace or on a family journey home in the case of double housekeeping are still deductible as extraordinary business expenses in addition to the travel allowance according to § 9 para. 1 sentence 1 EStG.

Which accident costs are additionally deductible?

• Vehicle repair costs
• Treatment or alleviation of physical injuries
• Replacement of damaged clothing, glasses, etc.
• Rental of a replacement vehicle
• Legal costs
• Third-party damage

The cause of the accident (own fault, third parties, natural events) is irrelevant.

Special conditions for people with disabilities

For people with a degree of disability (GdB):

• from 70 or
• 50–70 with the mark “G” or “aG”

applies: They may alternatively apply the business travel allowance of 30 cents per kilometre travelled or the actual km cost rate. Accident costs are also additionally deductible (BMF letter dated 31.08.2009, BStBl. 2009 I p. 891).

Special cases: Accident costs on detours

• Accident on detour to refuel (BFH ruling dated 11.10.1984, BStBl 1985 II p. 10)
• Accident when picking up passengers (BFH ruling dated 11.07.1980, BStBl 1980 II p. 655)
• Accident on journey to station to buy tickets (BFH ruling dated 04.07.1986, VI R 18/83)

Tip: Be cautious about going to court

There is no legal entitlement to the recognition of accident costs. In court, judges are bound by the law and BFH case law – not by administrative regulations.

Although a so-called self-binding of the administration may apply, this is assessed differently (e.g. Lower Saxony FG, ruling dated 28.01.2020, 12 K 213/19; BFH dated 03.07.2019, VI R 49/16).

Recommendation: Contact the tax office early or involve the department head instead of going straight to court.