If an insurance policy exclusively covers occupational risks, the insurance contributions are deductible as income-related expenses. This applies, for example, to work-related accident insurance, liability and legal expenses insurance.
If a deduction for income-related expenses is not possible, you may claim the insurance premiums as part of the deduction of the special expenses (sect. 10, para. 1, sentence 1 of the Income Tax Act (EStG)). This applies, among others, to life insurance, health and nursing care insurance, and occupational disability insurance.
Which insurance policies can I partially deduct as income-related expenses?
Insurance premiums can be deducted as special expenses under "other pension expenses", with the maximum deductible amount limited to 1.900 Euro or 2.800 Euro, provided this amount has not already been exhausted by contributions to health and nursing care insurance.
However, there is a way to claim certain insurance premiums at least partially as income-related expenses. This applies to insurance policies that cover a professional risk, namely:
- Accident insurance,
- Liability insurance,
- Legal expenses insurance.
(1) Accident insurance
For simplicity, you can deduct 50% of the accident insurance premiums as income-related expenses and 50% as special expenses. Simply include the premium invoice with your tax return. A certificate from the insurance company regarding the division of the premium into professional and private risks is not required here.
(2) Liability insurance
Premiums for professional liability insurance are fully deductible as income-related expenses. If you have professional liability insurance combined with private liability insurance, you should split the insurance premium into income-related expenses and special expenses. For this, you need a statement from the insurance company indicating which portion of the total premium relates to the professional sphere according to their calculation.
(3) Legal expenses insurance
Family legal expenses insurance covers not only private risks but also professional risks, especially employment legal protection. Have this portion certified by the insurance company and claim it as income-related expenses.
(2023): Which insurance policies can I partially deduct as income-related expenses?
How do I claim contributions to accident insurance as income-related expenses?
An accident insurance policy covering all accidents in daily life includes both private and occupational risks. Therefore, the insurance premiums can be partially deducted as business expenses and partially as special expenses. For simplicity, you can deduct 50% of the accident insurance premiums as business expenses and 50% as special expenses.
Simply include the premium invoice with your tax return. A certificate from the insurance company detailing the division of the premium into occupational and private risks is not required (BMF letter dated 28.10.2009, BStBl. 2009 I p. 1275, para. 1.3).
However, if you are engaged in a hazardous occupation and the occupational risk share is greater than 50%, you should have this confirmed by the insurance company. Then you should attach this certificate to your tax return and claim the higher occupational share as business expenses. If in doubt, ask your insurance company.
(2023): How do I claim contributions to accident insurance as income-related expenses?
When can insurance premiums be partially deducted as income-related expenses?
Insurance premiums can be deducted as special expenses under "other pension expenses", with the maximum deductible amount limited to 1.900 Euro or 2.800 Euro. However, if this amount is - as is usually the case - already exhausted by contributions to health and nursing care insurance, there is no room left for other contributions. How nice it would be if insurance premiums could then at least partially be deducted as income-related expenses. And this is indeed possible!
(1) Accident insurance
Accident insurance covering all accidents in daily life includes both private and professional risks. Therefore, the insurance premiums are partially deductible as income-related expenses and partially as special expenses. For simplicity, you can deduct 50% of the accident insurance premiums as income-related expenses and 50% as special expenses (BMF letter dated 28.10.2009, BStBl. 2009 I p. 1275, para. 1.3).
However, if you are engaged in a hazardous occupation and the professional risk share is greater than 50%, you should have this confirmed by the insurance company. Then you should attach this confirmation to your tax return and claim the higher professional share as income-related expenses. So, in case of doubt, ask your insurance company.
Only include the premium invoice with your tax return. A certificate from the insurance company regarding the division of the premium into professional and private risks is not required.
(2) Liability insurance
Many insurers offer combined professional and personal liability insurance. In this case, you should divide the insurance premium into income-related expenses and special expenses. But what share of the insurance premium is attributable to the professional area? Ask your insurance company about the professional share of the insurance premium. If the company provides "information on what share of the total premium according to their calculation is attributable to insurance coverage related to the professional sphere, a division of the premium into a professionally induced and a private share would be easily possible" (BFH ruling of 19.2.1993, BStBl. 1993 II p. 519). The contributions are deductible as income-related expenses to the extent of the professional share.
In many professions, there is an increased risk of being held liable for errors in professional activities. This applies, for example, to teachers, educators, police officers, architects, doctors, lawyers, tax advisors, notaries, land registry officials, mayors, managing directors, board members. Professional liability insurance - also referred to as service, official, or financial loss liability insurance - protects against the financial consequences of professionally justified claims for damages. The contributions are fully deductible as income-related expenses.
If you cannot provide information from the insurer about the professional premium share, estimate the professional share at around 80% and claim this as income-related expenses. This is justified by the predominance of professional liability. In the case of combined professional and personal liability insurance, the professional liability insurance clearly takes precedence, while the personal liability insurance is included at a favourable rate. The rest is deductible as special expenses.
(3) Legal expenses insurance
A combined legal expenses insurance is family legal protection insurance and family and traffic legal protection insurance. These insurances cover not only private risks but also professional risks, especially employment legal protection. Contributions to legal expenses insurance are not deductible as special expenses. The insurance premium is deductible as income-related expenses with the part that, according to the claims statistics of the insurance company, is attributable to employment legal protection (BMF letter dated 23.7.1998, DB 1998 p. 1590).
You must therefore enclose a certificate from the insurance company with your income tax return each year, confirming the professional share of the insurance premium. Ask your insurer to send you this certificate automatically each year.
(2023): When can insurance premiums be partially deducted as income-related expenses?
