Study costs: When are they tax deductible?

Expenses for a first degree after school or for initial vocational training outside of an employment-based training programme are only deductible as special expenses up to 6,000 Euro (§ 10 para. 1 no. 7 and § 9 para. 6 EStG). This limitation is constitutional. In other cases, study costs can be deducted without limit as business expenses or, for the self-employed, as operating expenses, for example in the case of a second degree or job-related training after initial training.

In the following cases, study costs are deductible as business expenses without limit:

• First degree after completed vocational training: For example, a degree after an apprenticeship (BFH ruling of 18.6.2009, BStBl. 2010 II p. 816).
• First degree as part of an employment-based training programme: For example, for officers, career soldiers or in dual study programmes.
• Second degree: After completing a first degree, if the degree is job-related.
• Master's degree: As it requires a completed Bachelor's or other degree, it is considered a second degree.
• Doctorate: The costs of a doctorate are deductible as business expenses if they are job-related.
• MBA: An MBA is also a second degree and the costs are fully deductible.
• Parallel degree courses: If a second degree course is continued after completing the first, the costs of the second degree are considered business expenses.
• Referendariat: For lawyers and trainee teachers, expenses after the first state examination are fully deductible.

Special case: Change of course without graduation: If a student changes course without completing the first degree, for example from law to medicine, the new course is not a second degree. In this case, expenses can only be deducted up to 6,000 Euro as special expenses.