If the expenses for the instructor activity exceed the income…
Part-time activities as instructor, trainer, educator, carer, nurse, and artist are tax-privileged: Payments for these activities are tax and social security-free up to 3.000 Euro per year. The tax-free maximum amount is not very generous, but many clubs cannot even pay this amount.
It is therefore not surprising that the role of an instructor is carried out with great idealism and commitment, and often involves personal expenses that exceed the income. The question then arises as to whether this loss from secondary employment can at least be offset against other income for tax purposes.
So far, tax offices have refused to recognise losses from secondary employment, arguing that the expenses are related to tax-free income and are therefore not deductible (in accordance with § 3c EStG). Expenses are only recognised if they exceed the tax-free income. In this case, both the income and the expenses must exceed the allowance of 3.000 Euro (until 2020: 2.400 Euro) (e.g. OFD Frankfurt dated 28.12.2015, S 2245 A-2-St 213).
The Federal Fiscal Court has ruled that losses from part-time instructor activities can be deducted even if the income does not exceed the allowance of 3.000 Euro. However, the prerequisite for the consideration of the loss is that the activity is carried out with the intention of making a profit and is therefore not a hobby (BFH ruling of 20.11.2018, VIII R 17/16).
The case: An instructor earns tax-free income of 108 Euro and has expenses of 608 Euro. He claims the difference of 500 Euro as a loss from self-employment. However, the tax office does not take the loss into account. The official argues that business expenses or income-related expenses from the instructor activity can only be taken into account for tax purposes if both the income and the expenses exceed the instructor allowance.
According to the BFH judges, an instructor who earns tax-free income below the instructor allowance can claim the related expenses for tax purposes if they exceed the income. Otherwise, the tax advantage intended by the legislator for part-time instructors would turn into a tax disadvantage. However, the instructor activity must be carried out with the intention of making a profit. If there is no intention to make a profit, the losses would not be taken into account for tax purposes.
Currently, the Thuringia Finance Court has added another variant to the consideration of losses from an instructor activity: If the income is below the tax allowance of 3.000 Euro and the expenses exceed the allowance, only the excess amount can be deducted as income-related expenses or business expenses (FG Thuringia of 30.09.2015, 3 K 480/14, revision III R 23/15).
Lohnsteuer kompakt
Currently, the Frankfurt am Main Regional Finance Office and the Bavarian State Tax Office have commented on issues relating to secondary employment. The OFD Frankfurt lists many individual cases and assesses them for tax purposes, for example for doctors in disability or corona sports, holiday supervisors, rescue workers or city and museum guides. It also deals with the tax classification of on-call services or purely organisational work in the non-profit sector.
The Bavarian State Tax Office, on the other hand, first sets out the principles for the tax exemption of part-time activities, such as their maximum duration: In relation to the calendar year, the activity must not exceed one third of the working hours of a comparable full-time job. The one-third limit is met on a flat-rate basis with a regular weekly working time of 14 hours (1/3 of 42 hours).
Here are the instructions:
- OFD Frankfurt, Rundvfg. of 02.09.2019, S 2245 A-002-St 29
- Brochure of the Bavarian State Tax Office
If you incur expenses in connection with a privileged secondary activity in a year without receiving any corresponding income, you can still claim these as pre-tax income-related expenses or business expenses, provided you provide proof (BFH ruling of 06.07.2005, BStBl. 2006 II p. 163). The tax authorities accept this decision (OFD Frankfurt dated 28.12.2015, S 2245 A-2-St 213).
(2021): If the expenses for the instructor activity exceed the income…
Which tax-free expense allowances do I need to declare?
If you have received tax-free expense allowances, please enter them here. This includes allowances received from public funds, a federal or state fund.
Employees often receive a tax-free expense allowance from a part-time job. This could be a role as an instructor, educator, trainer in the sports sector or as an artist such as a choir director or musician, and also as a carer for sick, elderly or disabled people. It must be an educational or caregiving role.
Payments for such a privileged part-time role are tax and social security-free up to 3,000 Euro (until 2020: 2,400 Euro). The condition for the tax benefit is that the role is part-time, carried out for a charitable organisation or a legal entity under public law, and serves charitable, benevolent or religious purposes.
The allowance of 3,000 Euro is granted per person only once, even if you have several eligible roles. It is therefore personal and not job-related. The allowance is an annual amount. Therefore, payments up to the maximum amount remain tax-free even if you do not carry out the eligible role for the entire year.
As a supporter of such an organisation, you can receive part or all of your expense allowance tax-free. Any amounts exceeding the allowance of 3,000 Euro must be taxed. If your expense allowance is less than 3,000 Euro, you can only claim the lower amount.
Example
Ms Meier teaches at a music school and receives 2,800 Euro annually for this. She also supervises a gymnastics group at the primary school and receives another 400 Euro per year for this. Both roles are tax-privileged under § 3 No. 26 EStG, but only up to a total of 3,000 Euro. Ms Meier must tax the remaining 200 Euro.
(2021): Which tax-free expense allowances do I need to declare?
Who can claim the trainer's allowance?
Those who wish to benefit from the so-called trainer's allowance do not necessarily have to be involved as a trainer in a sports club. The allowance can also be claimed for the following activities:
- training manager, instructor, educator, carer or similar activities
- artistic activities
- care of disabled, ill or elderly people
The trainer's allowance is subject to the following conditions:
- The activity must be carried out in the service or on behalf of a public or public-law institution, a non-profit association, a church or similar organisation to promote charitable, benevolent or church purposes.
- The activity must not be carried out as a main occupation; an activity is considered part-time if it does not take up more than one-third of a comparable full-time job.
- Each person can earn up to 3.000 Euro per year tax- and social security-free. Only the part of part-time income exceeding this allowance must be taxed.
Eligible activities include, for example:
- working as a sports trainer or team supervisor,
- a choir leader or orchestra conductor,
- teaching and lecturing as part of general education and training,
- support services by outpatient care services (R 3.26 para. 1 LStR),
- immediate measures for the seriously ill and accident victims, e.g. by paramedics and first aiders (R 3.26 para. 1 LStR),
- transport for disabled people.
Part-time activities in the private sector, for trade unions or political parties are not exempt from tax, as there is no "eligible client".
Lohnsteuer kompakt
Voluntary helpers in COVID vaccination centres can benefit from the so-called trainer's or volunteer allowance, whereby remuneration for certain activities is tax-free up to a fixed amount. The tax authorities determined this as early as February 2021. It should now be noted that the relief also applies if the vaccination centre is operated by a private service provider or if the helpers in the central vaccination centres and district vaccination centres are employed by a private personnel service provider (source: Ministry of Finance Baden-Württemberg, press release dated 20.08.2021).
According to tax regulations, it is actually necessary for the trainer's and volunteer allowance that the volunteers are employed by a non-profit or public employer - the state or a municipality - for the allowances to apply. However, the structure of the vaccination centres set up at short notice is very different; not all vaccination centres are, for example, directly operated by a municipality, the state or a non-profit organisation.
Following agreement between the federal and state governments, the trainer's allowance applies to all those directly involved in the vaccination process - i.e. in information sessions or the vaccinations themselves. This regulation applies to income in 2020 and 2021. The trainer's allowance was 2.400 Euro in 2020 and was increased to 3.000 Euro annually in 2021. Income from voluntary work is tax-free up to this amount.
Those involved in the administration and organisation of vaccination centres can claim the volunteer allowance. For 2020, it was up to 720 Euro, and since 2021, up to 840 Euro is tax-free.
Both the trainer's and volunteer allowance only apply to remuneration from part-time activities. This is usually the case if they do not take up more than one-third of the working hours of a comparable full-time position in a year. Part-time work is also possible for helpers who do not have a main occupation, such as students or pensioners. The trainer's allowance and the volunteer allowance are annual amounts granted once per calendar year. For various eligible activities, the income is added together.
(2021): Who can claim the trainer's allowance?
Who receives the allowance for voluntary service?
The so-called volunteering allowance under § 3 No. 26a EStG of 840 Euro per year is subject to the following conditions:
- The activity must be carried out in the service or on behalf of a legal entity under public law, based in the European Union or the European Economic Area (e.g. federal government, states, municipalities, certain religious communities) or a tax-privileged institution and must be in the charitable, benevolent or ecclesiastical sector.
- The voluntary activity must be part-time. This means that the actual time spent must not exceed one-third of the working hours of a comparable full-time job. With a regular weekly working time of up to 14 hours, part-time work can therefore be assumed. People who do not have a main occupation, such as housewives and househusbands, students, pensioners or unemployed persons, can also work part-time.
A significant difference from the tax exemption under § 3 No. 26 EStG ("trainer allowance") is that the volunteering allowance does not limit certain activities. It can be claimed for any type of activity for charitable associations, church or public institutions.
The tax exemption also applies, for example, if you receive income for an activity
- as a treasurer in a club,
- for the parents' driving service to away games for children, or
- for work as a board member,
- as cleaning staff,
- as a groundskeeper, or
- as a volunteer referee in amateur sports
A club or corporation must note the following: Payments to members must not be unreasonably high; that is, they must not be higher than payments to non-members. If the board receives remuneration beyond pure expense reimbursement, the articles of association must explicitly allow payment.
Lohnsteuer kompakt
Voluntary helpers in Covid vaccination centres can benefit from the so-called trainer or volunteering allowance, whereby remuneration for certain activities is tax-free up to a specified amount. The tax authorities determined this in February 2021.
Currently, it should be noted that the relief also applies if the vaccination centre is operated by a private service provider or if the helpers are employed in the central vaccination centres and district vaccination centres via a private personnel service provider (source: Ministry of Finance Baden-Württemberg, press release dated 20.08.2021).
According to tax regulations, it is actually necessary for the trainer and volunteering allowance that the volunteers are employed by a charitable or public employer - the state or a municipality - for the allowances to apply. However, the structure of the vaccination centres set up in a very short time is very different; not all vaccination centres are operated directly by a municipality, the state or a charitable organisation.
Following coordination between the federal and state governments, the trainer allowance applies to all those directly involved in the vaccination - i.e. in counselling sessions or the vaccination itself. This regulation applies to income in 2020 and 2021. The trainer allowance was 2.400 Euro in 2020 and was increased to 3.000 Euro annually in 2021. Income from voluntary work is tax-free up to this amount.
Those involved in the administration and organisation of vaccination centres can claim the volunteering allowance. For 2020, it was up to 720 Euro, and since 2021, up to 840 Euro is tax-free.
Both the trainer and volunteering allowances only apply to remuneration from part-time activities. This is usually the case if they do not take up more than one-third of the working hours of a comparable full-time position in the year. Helpers who do not have a main occupation, such as students or pensioners, can also work part-time. The trainer and volunteering allowances are annual amounts granted once per calendar year. For various eligible activities, the income is added together.
(2021): Who receives the allowance for voluntary service?
Can I also claim trainer allowances for multiple activities?
Yes. For example, if you work as a coach for two different clubs, you can receive the allowances from both clubs tax-free, provided the allowance of 3,000 Euro is not exceeded. Simply enter the sum of the two allowances in your tax return. Any amount exceeding the maximum must be taxed.
Tip
If you have different roles, one self-employed and the other employed, you must allocate this amount to one type of income in your tax return: either self-employed or employed. In this case, you only receive the trainer's allowance once in total.
(2021): Can I also claim trainer allowances for multiple activities?
Can additional expenses be claimed alongside the trainer's allowance?
The current allowance for trainers, coaches, etc. is 3.000 Euro. This means that income in the area of voluntary civic engagement remains tax and social security free up to an amount of 3.000 Euro. However, expenses up to 3.000 Euro cannot be claimed additionally.
Income exceeding 3.000 Euro is taxable. However, expenses or business expenses can then be taken into account, but only if they have not been reimbursed tax-free.
(2021): Can additional expenses be claimed alongside the trainer's allowance?
Is it possible to receive a tax reduction for activities not covered by the trainer's allowance?
Yes. The trainer's allowance is only available for educational and caregiving activities.
However, there are other activities that can receive tax benefits if you are volunteering. If you work for a non-profit association or a public corporation, you can receive up to 840 Euro (until 2002: 720 Euro) tax-free without meeting the requirements for the trainer's allowance.
Thus, practically any expense allowance for charitable work is tax-free up to 840 Euro. However, an important condition must be met: you must work part-time for the charitable institution.
I N F O
Examples of activities eligible for the 840 Euro tax reduction (BMF letter dated 21.11.2014):
- Club board, treasurer, cashier, secretary.
- Groundskeeper, hall manager, equipment manager, music librarian, fire equipment manager.
- Supervisors.
- Office staff, cleaning staff.
- Parents driving their children to football matches.
- Refereeing in amateur sports.
- Volunteers at welfare organisations.
- Volunteers in church activities.
- Care and training of animals, e.g. racehorses and service dogs.
- Animal carers in an animal shelter.
- Supervisory duties in a swimming pool.
- Church board.
- Patient advocates in hospitals.
(2021): Is it possible to receive a tax reduction for activities not covered by the trainer's allowance?
