If the expenses for the instructor activity exceed the income…

Secondary occupations as instructors, educators, carers, nurses, and artists are tax and social security-free up to 3,000 Euro per year. However, this allowance is often not reached. The question is whether losses from such secondary occupations can be offset against other income.

Previously, tax offices rejected the recognition of losses from secondary occupations, as the expenses were related to tax-free income. Expenses are only recognised if they exceed the tax-free income and both exceed the allowance of 3,000 Euro.

However, the Federal Fiscal Court ruled that losses from such activities are also deductible if the income does not exceed the allowance. This requires that the activity is carried out with the intention of making a profit and is not a hobby.

The Frankfurt Regional Finance Office and the Bavarian State Tax Office have assessed many individual cases, e.g. doctors in disability sports, holiday supervisors, rescue workers, and city guides. Principles for the tax exemption of part-time activities have also been recorded in the brochure "Tax exemption for part-time activities according to § 3 No. 26 / 26a EStG". The activity must not exceed one third of the working hours of a comparable full-time job in the calendar year, based on a regular weekly working time of 14 hours.

If you have expenses for a subsidised secondary occupation but do not earn any income, you can still claim them as anticipated income-related expenses or business expenses (BFH ruling of 6.7.2005, BStBl. 2006 II p. 163). The tax authorities accept this decision (OFD Frankfurt of 28.12.2015, S 2245 A-2-St 213).

The Federal Fiscal Court recently ruled that losses from a part-time instructor activity are deductible even if the income does not exceed the allowance. 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 not a hobby (BFH ruling of 20.11.2018, VIII R 17/16).

(2023): 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.

However, employees usually receive a tax-free expense allowance from part-time work. 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 eligible part-time work are tax and social security-free up to 3,000 Euro. The condition for the tax benefit is that the work 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 only once per person, 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 work for the entire year.

As a supporter of such an organisation, you can receive part or all of your expense allowance tax-free. However, 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.

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 activities 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.

(2023): 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 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, supervisor or similar activities
• artistic activities
• care of disabled, sick or elderly people

The trainer 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 promoting charitable, benevolent or religious 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 the 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 in the context of general education and training,
• support services provided 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".

As early as 2020 to 2022, voluntary helpers in vaccination and test centres could use the so-called trainer or volunteer allowance.

The Thuringian Ministry of Finance confirms that these reliefs will also apply in 2023. The regulation is uniform nationwide (Thuringian MinFin of 9.2.2023, 1040-21-S 1901/67-18465/2023).

For those directly involved in vaccinations or tests, the trainer allowance applies (§ 3 No. 26 EStG). From 2021, it amounts to 3,000 Euro per year. This also includes preparatory and follow-up activities. Those involved in the administration and organisation of vaccination or test centres can claim the volunteer allowance.

From 2021, it amounts to 840 Euro (§ 3 No. 26a EStG). To use the allowances, the client or employer must be charitable or a public employer. The allowances only apply to part-time activities where the working hours do not exceed certain limits.

The trainer and volunteer allowances are annual amounts that cannot be divided. If different activities fall within the scope of § 3 No. 26 or 26a EStG, the maximum amount can only be granted once.

(2023): 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, it can therefore be assumed to be part-time. 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 providing transport for parents to away games for children,
• 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 mere reimbursement of expenses, the statutes must explicitly allow payment.

As early as 2020 to 2022, voluntary helpers in vaccination and test centres could use the so-called trainer or volunteering allowance.

The Thuringian Ministry of Finance confirms that these reliefs will also apply in 2023. The regulation is nationwide (Thuringian MinFin of 9.2.2023, 1040-21-S 1901/67-18465/2023).

For those directly involved in vaccinations or tests, the trainer allowance (§ 3 No. 26 EStG) applies. From 2021, it amounts to 3.000 Euro per year. This also includes preparatory and follow-up activities. Those involved in the administration and organisation of vaccination or test centres can claim the volunteering allowance.

From 2021, it amounts to 840 Euro (§ 3 No. 26a EStG). To use the allowances, the client or employer must be charitable or a public employer. The allowances only apply to part-time activities where the working hours do not exceed certain limits.

The trainer and volunteering allowances are annual amounts that cannot be divided. If different activities fall within the scope of § 3 No. 26 or 26a EStG, the maximum amount can only be granted once.

(2023): Who receives the allowance for voluntary service?

Can I also claim multiple trainer allowances?

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 total of the two allowances in your tax return. Any amount exceeding the maximum must be taxed.

If you carry out various activities, one on a self-employed basis and the other not self-employed, you must allocate this amount to one type of income in your tax return: either self-employed or not self-employed. In this case, you will also only receive the trainer's allowance once in total.

(2023): Can I also claim multiple trainer allowances?

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.

(2023): Can additional expenses be claimed alongside the trainer's allowance?

Can I 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 tax-free without meeting the requirements for the trainer's allowance.

In practice, expense allowances for any charitable work are tax-free up to 840 Euro. However, an important condition must be met: you must work part-time for the charitable institution.

Examples of activities that fall under the 840 Euro tax reduction (BMF letter dated 21.11.2014):

• Club board, treasurer, cashier, secretary.
• Groundskeeper, hall manager, equipment manager, music librarian, fire service 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.

(2023): Can I receive a tax reduction for activities not covered by the trainer's allowance?