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.
Tip
All self-borne expenses for the elimination of health damage caused by the accident on a business trip are deductible as business expenses. This includes your own expenses for doctors, pharmacies, hospitals, massages, etc. - including travel to them (BFH ruling dated 13.10.1960, BStBl. 1960 III p. 511; BFH ruling dated 02.03.1962, BStBl. 1962 III p. 192).
Such medical expenses could also be claimed as extraordinary burdens under § 33 EStG. However, they would usually not have a tax-reducing effect due to the crediting of the reasonable burden. In the case of business expenses, however, such crediting does not apply, so they have a full effect here as soon as the total business expenses exceed the employee allowance.
(2021): Accident costs covered by the travel allowance?
When can I deduct accident costs?
You can deduct the costs of an accident as business expenses if the damage occurred during a work-related journey. Work-related journeys include, for example:
- Journeys between home and workplace
- Business trips or off-site work
- Journeys as part of maintaining a second household
- Journeys during a work-related move
- Journeys during professional training
The question of fault is not relevant to the deductibility of accident damage. This also applies if you have to pay a fine as a result of the accident. However, the misconduct must be within the scope of the professional objective, and alcohol must not be involved.
Note: The tax courts and the Federal Fiscal Court consider accident costs to be covered by the travel allowance. However, the tax authorities have repeatedly instructed tax offices to recognise accident costs in addition to the travel allowance if they occur during a journey between home and the primary workplace or on a family commute to be taken into account. This was most recently stated in the BMF letter dated 31.10.2013 (BStBl 2013 I p. 1376), under number 4. The BMF can confidently rely on the legislator, as the explanatory memorandum to the amendment of § 9 para. 2 EStG also states that "accident costs are to be taken into account again as extraordinary expenses in addition to the travel allowance" (BT-Drucksache 16/12099 dated 03.03.2009, pages 6 and 8).
(2021): When can I deduct accident costs?
Which accident-related costs can I deduct?
If you have an accident during a work-related journey, you can claim the resulting costs as business expenses in your tax return. In addition to accident costs, you can also claim other expenses if your car is damaged or stolen. You can claim, for example, the following expenses:
- Repair costs
- Hire car costs
- Theft of car radio
- Compensation payments for third-party damage
- Costs for experts, lawyers, and courts
- Recovery costs
- Towing costs
- Expenses for trips to the garage, expert, etc.
If you receive a reimbursement from a third party, you must deduct this from your accident costs if you receive the reimbursement in the year of the accident or in the year the accident costs were paid. If you receive the reimbursement later, you must declare it as income. The tax office usually requires the following evidence:
- Accident location and time
- Police report of the accident
- Proof of insurance payments
- Witnesses, if applicable
- Invoices showing the repair costs
Note: Although the tax courts and the Federal Fiscal Court consider accident costs to be covered by the travel allowance, the tax authorities have repeatedly instructed tax offices to recognise accident costs in addition to the travel allowance if they occur during a journey between home and the first place of work or on a family commute to be taken into account. This was most recently stated in the BMF letter dated 31.10.2013 (BStBl 2013 I p. 1376), under number 4. The BMF can rely on the legislator in this regard, as the explanatory memorandum to the amendment of § 9 para. 2 EStG also states that "accident costs are to be taken into account again as extraordinary expenses in addition to the travel allowance" (BT-Drucksache 16/12099 dated 03.03.2009, pages 6 and 8).
(2021): Which accident-related costs can I deduct?
