When are training costs classed as special expenses and when as income-related expenses?

A distinction is made between training and further training costs as follows:

(1) Training costs are only the expenses for the first professional training and for a first degree as initial training. You can deduct these costs as special expenses, but only up to a maximum amount of 6.000 Euro.

(2) Further training costs are costs for all educational measures taken after the first professional training or after the completion of the first degree. This also includes retraining for a different profession, educational measures in the current profession, further training in a non-practised profession, or a second degree. You can fully deduct such costs as income-related expenses. However, it is important that the expenses are related to the profession and that you intend to use the further training to generate income.

(3) First or second degree? The costs for the first degree can only be deducted as special expenses to a limited extent. For a second degree, the costs can always be fully deducted as income-related expenses - provided that income is also to be generated. The second degree must not be pursued as a hobby, as some pensioners do, for example.

You can only claim special expenses in the year of payment. So if you are a student without taxable income, you will not benefit from a deduction for special expenses. However, if you claim the training costs as income-related expenses, you can carry this financial loss forward to your first year of employment in which you earn income. You must then claim your expenses as anticipated income-related expenses.

Mr A and Ms B are students. Mr A has already completed a degree, Ms B has not. Both have no taxable income in the relevant year, but 4.500 Euro in training costs. In the following year, both have similarly paid jobs.

As Ms B is undertaking a first degree, she can only claim the costs as special expenses in the year they are incurred. Without taxable income in that year, she has no tax advantage.

Mr A has completed a second degree. He can declare the training costs in a tax return for the relevant year as income-related expenses and thus incurs a loss. He can also claim this loss in the year after his studies when he has taxable income.

In the first year after his studies, Mr A therefore pays less tax than Ms B, assuming the same salary.

(2023): When are training costs classed as special expenses and when as income-related expenses?

When study costs are unequivocally deductible as income-related expenses

Expenses for a first degree following A-levels and for initial vocational training outside of an employment training relationship are only deductible as special expenses up to a limit of 6,000 Euro (§ 10 para. 1 no. 7 and § 9 para. 6 EStG). This regulation is constitutional. In other cases, expenses are deductible as business expenses without limit, either as advertising expenses or, for the self-employed, as business expenses, e.g. for job-related training after completing initial training or a first degree, for a second degree or retraining. This also applies to initial vocational training as part of an employment training relationship (apprenticeship, traineeship, dual study programme), as the training allowance is taxable. In the following cases, study costs are unquestionably deductible as advertising expenses without limit:

• First degree after completing vocational training, e.g. degree after an apprenticeship (BFH ruling of 18.6.2009, BStBl. 2010 II p. 816).
• First degree as part of an employment or training relationship, e.g. for officers and career soldiers in the German Armed Forces or as part of dual vocational training (dual study programme).
• Second degree after completing a first degree. Provided the degree is sufficiently related to future income from the intended occupation and is not pursued out of purely private interest.
• University degree after completing a degree at a university of applied sciences or after studying at a teacher training college or art college.
• If two or more degree programmes are started in parallel and completed at different times, the second degree programme is considered a second degree after the first degree has been completed, meaning that expenses can be considered as advertising expenses from this point onwards.
• A degree qualifying for a profession is the first state examination, which provides the professional qualification for a preparatory service. Therefore, expenses for the traineeship for lawyers and trainee teachers after the first state examination are deductible as advertising expenses without limit.
• A bachelor's or baccalaureate degree is also considered a degree qualifying for a profession. A subsequent degree programme is a second degree, so these expenses are deductible as advertising expenses without limit. This mainly applies to a master's degree, as this cannot be started without a completed bachelor's or other degree.
• An MBA programme leading to a "Master of Business Administration" generally requires a completed university degree. Therefore, it is a second degree, and the expenses are fully deductible as advertising expenses.
• Lawyers occasionally complete an additional "Master of Laws" (LL.M) degree at a foreign university after passing the first state examination. Related expenses are fully deductible as advertising expenses if they are professionally motivated.
• A doctorate or doctoral studies are generally undertaken after completing a first degree. Therefore, the expenses are deductible as advertising expenses without limit, provided there is a professional connection. The costs of a doctorate are even considered as advertising expenses if, in individual cases, it is undertaken without a prior degree qualifying for a profession.

If you change your course of study without completing the initially started programme, e.g. from law to medicine, the first degree is not considered completed. Consequently, the new course of study is not a second degree, and the expenses for it are only deductible as special expenses.

(2023): When study costs are unequivocally deductible as income-related expenses

First degree: What are the chances of a full deduction for income-related expenses?

Expenses for the first vocational training and for the first degree as initial training, which are not completed as part of an employment-based training programme (e.g. apprenticeship), are currently only deductible as special expenses up to a limit of 6,000 Euro, whereas the costs for any educational measures after completing vocational training, including a first degree after an apprenticeship, can be fully considered as business expenses (§ 4 para. 9, § 9 para. 6, § 10 para. 1 no. 7 and § 12 no. 5 EStG).

The Federal Constitutional Court has now ruled: The current legal regulation is constitutional. The fact that expenses for initial vocational training or for a first degree as initial training cannot be deducted as business expenses does not violate the Basic Law (BVerfG decision of 19.11.2019, 2 BvL 22/14, 2 BvL 23/14, 2 BvL 24/14, 2 BvL 25/14, 2 BvL 26/14, 2 BvL 27/14, published on 10.1.2020).

(2023): First degree: What are the chances of a full deduction for income-related expenses?

Training costs deductible as business expenses after all?

In the opinion of the Federal Fiscal Court, training costs should be deductible as business expenses without limit. Training costs are incurred as a necessary prerequisite for subsequent employment and are therefore business expenses, as they serve to generate taxable income.

Thus, the BFH judges asked the Federal Constitutional Court to clarify whether it is compatible with the Basic Law that, according to § 9 para. 6 EStG, expenses for initial vocational training or for a first degree course are not recognised as business expenses (BFH decision of 17.7.2014, VI R 8/12 and VI R 2/12).

Currently, however, the Federal Constitutional Court has - after more than 5 years(!) - finally clarified the highly controversial issue - unfortunately to the great disappointment of all those affected and to the delight of the tax authorities: 

The current legal regulation is constitutional. The fact that expenses for initial vocational training or for a first degree course cannot be deducted as business expenses does not violate the Basic Law. The constitutional judges thus contradict the highest financial judges! (BVerfG decision of 19.11.2019, 2 BvL 22/14, 2 BvL 23/14, 2 BvL 24/14, 2 BvL 25/14, 2 BvL 26/14, 2 BvL 27/14, published on 10.1.2020).

(2023): Training costs deductible as business expenses after all?

Au pair stay: Language lessons count as vocational training

Many school leavers are drawn abroad for a period of time after their A-levels. As an au pair, they want to improve their language skills with language lessons and get to know the country and its people. In return for free board and lodging, the host family expects help with childcare and household duties. During the stay abroad, parents are only entitled to child benefit or tax allowances if the au pair stay is considered vocational training.

How can an au pair stay be recognised as vocational training? It is necessary for the child to participate in theoretical and systematic language lessons that amount to at least 10 hours per week.

Does it have to be exactly 10 hours per week, or might 8.6 hours per week be sufficient?

In addition to pure language lessons, the au pair must also spend time on preparation and follow-up work.

Currently, the Federal Fiscal Court has ruled that language lessons of only 8.6 hours per week are not sufficient. Therefore, the au pair stay abroad is not recognised as vocational training. In this case, neither child benefit nor child allowances were granted. "If the average is less than 10 hours per week, exceptionally individual months may still be considered as vocational training if they are characterised by intensive lessons of significantly more than 10 hours, e.g. due to block lessons or courses" (BFH decision of 14.6.2016, III B 132/15).

Exceptionally, language lessons of less than 10 hours per week may be sufficient for consideration as vocational training. This is the case if the foreign language lessons are a mandatory requirement in a training or examination regulation or if the language lessons prepare for a recognised foreign language test. The two most important English language tests are TOEFL (Test of English as a Foreign Language) or IELTS (International English Language Testing System). (BFH ruling of 15.3.2012, III R 58/08; BFH ruling of 26.10.2012, VI R 102/10).

TOEFL language tests count as vocational training

Currently, the Saarland Finance Court has confirmed that an au pair stay after passing the TOEFL language test can be considered vocational training. However, one condition was particularly emphasised: Even if the acquisition of language skills is verified by a language test - such as TOEFL or IELTS - there must still be a concrete connection to vocational training. It is therefore important that studies or other training are started or continued immediately (FG Saarland of 2.2.2014, 2 K 1308/13, rkr.).

(2023): Au pair stay: Language lessons count as vocational training

How does a home office affect taxes during training?

If you are currently undergoing training or studying and use a home office, there are a few tax-related things you should know.

1. Deducting costs: You can generally claim the costs for your home office. This includes rent, utilities, and cleaning costs. Alternatively, you are entitled to an annual allowance of 1,260 Euro. However, there are conditions.
2. Centre of your work: You can only deduct these costs or the annual allowance if your home office is the main place where you carry out the majority of your professional or educational activities. It must be a proper room, not a workspace in a corner.
3. Daily allowance: Often, the home office is not the main place of your activities. In this case, you can instead claim a daily allowance of 6 Euro per day for a maximum of 210 days per year. It doesn't matter whether you work at a proper desk or just at your kitchen table.
4. Work equipment: The costs for work equipment such as computers or desks are not included in the office costs or the allowance. You can additionally claim them as business expenses. This also applies to training costs, training employment relationships, and initial studies.
5. Note: If you also use your home office for income and it is the main place of your work, you must allocate the costs according to your usage. However, you can also forgo allocation and assign everything to one activity.

These are the basics you should consider regarding the tax deductibility of your home office as a trainee or student.

(2023): How does a home office affect taxes during training?

When are pilot training costs deductible?

The costs of pilot training are only fully deductible as anticipated income-related expenses if a "proper" initial training has been completed beforehand. According to the legal situation from 2015, initial training is only considered "proper" if it lasts at least twelve months full-time and ends with an examination. Only after such initial training can the costs for further training be claimed in full as income-related expenses (§ 9 para. 6 EStG 2015).

Shorter training courses are considered "vocational preparation measures" or "training phases" and not as initial training. However, the costs of such training phases are deductible as special expenses up to 6.000 Euro (§ 10 para. 1 no. 7 EStG).

The Federal Fiscal Court recently ruled that costs for pilot training without prior initial training are not deductible as income-related expenses, even if the taxpayer had previously worked in another profession for many years. Long-term employment does not replace "proper" initial training, and the costs of pilot training can only be deducted as special expenses to a limited extent (BFH ruling of 15.2.2023, VI R 22/21).

Example: A pilot obtained the instrument rating for aircraft in 2016 and the type rating for the Airbus A320 in 2017, but had not completed a proper initial training beforehand. The tax office recognised the costs of pilot training only as special expenses.

According to the judges, the 20-month internship did not meet the requirements for initial training, as there was no structured training and no final examination. The several years of commercial activity before the pilot training was also not considered as initial training.

The classification of the costs of professional pilot training as retraining costs, which would be deductible under § 9 para. 1 sentence 1 EStG, was also rejected. This would contradict the aim of limiting the deduction of income-related expenses.

There is no objective reason why longer employment as a taxi driver or ski instructor should exclude the deduction of income-related expenses, while several years of employment as a DJ/musician should not prevent this (see BT-Drucksache 18/3017, p. 43).

(2023): When are pilot training costs deductible?

How can I deduct training costs as special expenses?

Expenses for initial vocational training can be deducted as special expenses up to a maximum amount of 6,000 Euro. This means these costs reduce your taxable income and therefore your tax burden. You may receive a refund of the tax you paid in advance during the year, or a possible additional payment may be reduced.

However, if your training takes place as part of a training employment relationship, such as an apprenticeship or traineeship, a different regulation applies: In this case, you can deduct the costs in full as income-related expenses, because the income from the training relationship is taxable. The costs can also be deducted as income-related expenses if the training is your second vocational training, i.e. you have already completed initial vocational training.

Whether an educational measure is considered further training or training makes a big difference for tax purposes. For further training, expenses are deductible as income-related expenses without limit. For training, you can only deduct the costs to a limited extent as special expenses. If training or studies are merely for general education or a hobby, the costs are not deductible.

For jointly assessed spouses, it does not matter which of the two paid the costs for one spouse's training. If both spouses are in training, each can claim their expenses up to the maximum amount of 6,000 Euro. However, each partner must list their costs individually. A married couple can therefore deduct a maximum of 12,000 Euro of training costs as special expenses. However, one spouse cannot transfer part of their maximum amount to the other if they do not fully use it.

(2023): How can I deduct training costs as special expenses?

What counts as vocational training?

Vocational training, the costs of which you can claim as special expenses, primarily includes initial vocational training (excluding training as part of an employment relationship, such as an apprenticeship) or a first degree. Costs for attending general education schools to obtain a secondary school certificate or A-levels are also considered training costs. Any further educational measure after the first professional qualification is further training, which you can deduct as business expenses without limit.

"For the first time" means that no other completed vocational training or university degree preceded the training. If you are already working without a completed training and obtain such a qualification later, this is also initial vocational training, which must be entered under special expenses. Since 2015, the term "initial training" has been legally defined: Proper initial training only exists if the training lasts at least 12 months full-time and ends with an examination. Only after such initial training can the costs for further training be deducted as business expenses (§ 9 para. 6 EStG).

Not accepted as vocational training is when you undertake the educational measure only out of interest in general education or as a hobby. For example, if you train as an instructor to teach in a sports club for money, or if you take a photography course as a dental technician, this is not considered further training.

(2023): What counts as vocational training?

Which expenses for vocational training can I deduct?

Individuals undergoing vocational training can declare the following expenses as special expenses in their tax return:

• Costs for learning and work materials, such as textbooks, writing materials, office supplies, copies, calculators, desks, bookshelves, etc.
• Participation fees, such as course, training, study, school, admission, and examination fees
• Costs for study trips, excursions, or class trips
• Travel expenses to the training location with the distance allowance of 30 cents per kilometre or 38 cents from the 21st kilometre
• Trips to private study groups with the business travel allowance of 30 cents per kilometre
• Costs for accommodation and meals away from home if you have your own flat at the training location.
• Interest on the repayment of a student loan, in the year of payment
• Costs for a home office
• Costs for telephone and internet if used for vocational training.

(1) If you use a computer for training, you can deduct the pro rata annual depreciation (1/36 of the purchase costs per month) for the duration of the training. Purchase costs up to 800 Euro (net) can be deducted immediately.

(2) Retroactively from 1 January 2021, there is a particularly advantageous new regulation for all types of computers and software: The Federal Ministry of Finance has very generously stipulated that the standard useful life for hardware and software is generally one year. This means: The purchase costs can now always be fully deducted in the year of purchase as business expenses or operating costs, regardless of the amount (BMF letter of 26 February 2021, IV C 3-S 2190/21/10002:013). In our opinion, this also applies to special expenses.

If you receive tax-free income such as BAföG to support your vocational training, the expenses will be reduced by this amount. However, this only applies if it is a grant towards your training costs that you do not have to repay; grants for living expenses do not have to be deducted. If, on the other hand, you receive a loan that you have to repay, you do not have to deduct this from your training costs.

Students pursuing a second degree can claim accommodation costs and additional meal expenses for a semester abroad or work placement as pre-employment expenses. This applies, according to a recent Federal Fiscal Court ruling, if the study regulations make this mandatory. Students do not establish another primary place of work at the other university (BFH ruling of 14 May 2020, VI R 3/18).

Tip: Training costs should always be paid by the trainee themselves, not by the parents.

(2023): Which expenses for vocational training can I deduct?

Can I claim a deduction for my home office?

Expenses for a home office can be deducted as business expenses or operating costs.

From 1 January 2023, the tax treatment of expenses for "home office" and "homework" has been newly regulated, with the following two cases to be distinguished (§ 4 para. 5 no. 6b and 6c EStG, amended by the "Annual Tax Act 2022" of 16 December 2022; BMF letter of 15 August 2023, IV C 6-S 2145/19/10006):

1. The home office is the "centre" of all business and professional activities:

   In this case, the costs of the home office can be deducted as business expenses or operating costs either in the actual amount or - new - with an annual flat rate of 1,260 Euro. However, it must be a "genuine" home office, i.e. a separate room used almost exclusively for work and containing no private items. For example, writers, translators or IT specialists who work almost exclusively from home have the centre of their activity in their home office.

2. No centre, but work is (also) carried out at home:

   In this case, a daily allowance of 6 Euro can be deducted for each day, for a maximum of 210 days, i.e. a maximum of 1,260 Euro per year. To receive the daily allowance, the workplace in the home does not have to meet any special requirements. It does not matter whether you work in a work corner, at the kitchen table or in a separate room.

Home office as centre

As stated above, expenses for the home office may be deducted in full or with the annual allowance if it is the "centre of all business and professional activities" (§ 4 para. 5 sentence 1 no. 6b sentence 2 EStG). The following details must be observed:

• The annual allowance of 1,260 Euro is a flat rate that covers the expenses for all business and professional activities in the home office. Costs up to 1,260 Euro do not have to be proven.
• The option to deduct the annual allowance instead of the actual expenses can only be exercised uniformly for the entire year. The option can be exercised until the tax assessment becomes final.
• The annual allowance is applied on a monthly basis. If the conditions for deducting home office expenses are not met for the entire year, the annual allowance is reduced by one twelfth for each full calendar month in which the conditions for deducting home office expenses are not met.
• The annual allowance is to be applied on a per-person basis. It cannot be claimed multiple times for different activities, but must be allocated to the different activities if necessary.
• In addition to the deduction of the annual allowance, a deduction of the daily allowance (6 Euro per day) for another activity for the same period is not permitted.
• If several people, e.g. spouses, partners, share a home office, the conditions must be checked for each individual taxpayer.

Example 1:

A and B each use a home office 50% of the time. Only for A is the home office the centre of all business and professional activities. The total costs are 4,000 Euro and are borne according to the usage share.
A can deduct 2,000 Euro as business expenses or operating costs. B cannot deduct any expenses for a home office for the business or professional activity carried out in the home office, but only the daily allowance of 6 Euro per day.

Example 2:

A and B share a home office, which is the centre of all business and professional activities for both of them throughout the calendar year. They waive the calculation of the expenses incurred for this and can therefore each deduct the annual allowance of 1,260 Euro as business expenses or operating costs.

Professional activity at home, but not the centre

Corona has changed the world of work. Many employees work partly in the home office and partly at the company or authority, so the centre of their activity is not in the home office. And not all employees (or self-employed) have a separate room that is accepted as a home office for tax purposes. However, they also incur expenses for heating, electricity and water due to their professional activity in the home, e.g. in a work corner. In the years 2020 to 2022, those who worked from home and did not have a recognised home office could claim a flat rate of 5 Euro per day, up to a maximum of 600 Euro per year, as business expenses. This was the home office allowance. And from 2023, they are also entitled to tax relief.

• From 1 January 2023, the home office allowance is no longer limited. The tax deduction has been increased from 5 Euro to 6 Euro per day and is granted for a maximum of 210 instead of the previous 120 homework days. Unlike the previous 600 Euro, the maximum amount is now 1,260 Euro per year (§ 4 para. 5 no. 6c EStG, introduced by the "Annual Tax Act 2022" of 16 December 2022).
• The previous term "home office allowance" was misleading as it gave the impression that a home office was required. The legislator now refers to an activity in the home - probably regardless of whether it is the main or holiday home. Therefore, it should now be referred to as a homework allowance or simply a daily allowance.
• To receive the daily allowance, the workplace in the home does not have to meet any special requirements. It does not matter whether you work at the kitchen table, in a work corner or in a separate room. The concept of a home office is not a prerequisite for the deduction of the allowance. The daily allowance covers all (additional) expenses for the use of the home.
• Daily allowance: Taxpayers can deduct a flat rate of 6 Euro for each day on which the business or professional activity is carried out "predominantly" in the home and the first place of work is not visited. A deduction of the daily allowance is also permissible if another workplace is available. "Predominantly" is a time-based determination. This means that more than half of the actual daily working time must be spent in the home.
• Maximum amount: The deduction of the daily allowance for a home workplace is limited to a maximum of 1,260 Euro per year (210 days x 6 Euro). The costs for work equipment can be deducted additionally.
• Option: For simplification purposes, employees who have a recognised home office can also choose between the - possibly pro rata - annual allowance of 1,260 Euro and the daily allowance of 6 Euro per day. It is not permissible to deduct actual costs, annual or daily allowances side by side. This also applies if several activities are carried out in the calendar year. The deduction always refers to the entire business and professional activity of the taxpayer.
• Activities: If taxpayers carry out different business or professional activities, both the daily allowance of 6 Euro and the maximum amount of 1,260 Euro can be allocated to the different activities or assigned to one activity in total. The amounts cannot be deducted multiple times for different activities.
• Double household: If accommodation costs are claimed as part of a double household, an additional deduction of the daily allowance is not permitted. The same applies if costs for a home office are deducted.
• Offsetting: The daily allowance is offset against the employee allowance of 1,230 Euro, just like other business expenses. This means that there is only a tax saving if the total business expenses exceed 1,230 Euro.
• Record-keeping obligation: The calendar days on which the conditions for claiming the daily allowance are met must be recorded by the taxpayer and credibly demonstrated in an appropriate form.

The question is whether travel expenses can also be deducted in addition to the daily allowance.

Here it is necessary to distinguish whether the journeys are to the "first place of work" or are carried out as part of "off-site work" (basic case). And then there is a special regulation if "no other workplace is permanently available". Let's start with the basic case:

• Journeys to the first place of work: If the employee also travels to their first place of work on a day with homework, the daily allowance of 6 Euro cannot be deducted, but only the travel costs with the distance allowance. A combination of allowance and travel costs is generally not permitted. In these cases, it does not matter for the deduction of the daily allowance whether another workplace is available to the employee.
• Journeys as part of off-site work: If the employee also carries out off-site work in addition to working in the home, they can deduct both the daily allowance and the travel expenses (business trip). However, the daily allowance is only available if the work is carried out "predominantly in the home" on that day, i.e. more than half of the actual daily working time.

Example 1:

An employed civil engineer first goes to the construction site (off-site work) on one day and then does the office work not at the employer's workplace (first place of work) but at his workplace in the home. The civil engineer can deduct both travel expenses for the journey to the construction site and the daily allowance for this day if the work was carried out predominantly in the home, i.e. more than half of the total working time of the day.

Example 2:

V is an employed insurance broker. On one day, V first drives to a customer (one hour travel time) and advises them in their home (duration: two hours). V then drives back home (one hour travel time). From there, V carries out further professional activities at the kitchen table in the home (three hours). V has another workplace available in the employer's office (first place of work). V does not work predominantly in the home. The travel times (total of two hours for the outward and return journey) and the consultation at the customer's premises (two hours) together exceed the working time in the home (three hours). V is not entitled to the daily allowance.

Special regulation "no other workplace":

If "no other workplace" is permanently available for the professional or business activity and the activity is carried out in the home and at the first place of work or off-site, both the daily allowance and the travel expenses or travel costs can be deducted. In these cases, it is not necessary for the activity to be carried out "predominantly in the home". The special regulation applies to many teachers whose main place of work is at school, but who do not have a desk there for lesson preparation and follow-up.

Example:

Mr Steuerle is a teacher and teaches at school daily from 8:00 a.m. to 1:00 p.m. and carries out lesson preparation and follow-up work and marks classwork in the home from 3:00 p.m. to 6:00 p.m. No other workplace is available to Mr Steuerle at the school for lesson preparation and follow-up. Mr Steuerle can deduct both the distance allowance for the journeys to the school (first place of work) and the daily allowance for the professional activity in the home.

(2023): Can I claim a deduction for my home office?

Legal situation regarding first degree and tax deduction of expenses

An "initial degree" is one that is undertaken as the first stage of higher education, typically immediately after completing secondary school. In this case, study costs can only be deducted as training costs up to a limit of 6,000 Euro as special expenses.

If an initial degree is pursued after completing vocational training, the costs can be deducted in full as - previously incurred - income-related expenses (BFH ruling of 18.6.2009, BStBl. 2010 II p. 816).

If the initial degree is part of a training employment relationship, the expenses can be deducted in full as income-related expenses, as the training salary is taxable, e.g. vocational academies, dual study programmes.

In the case of an initial degree, study costs can be unlimited income-related expenses in the following cases (BMF letter of 22.9.2010, BStBl. 2010 I p. 721):

• If two or more degree programmes are started in parallel and completed at different times, the second degree programme is considered a second degree after the completion of the first, meaning that expenses can be considered as income-related expenses from that point onwards.
• A professional qualification is considered to be the first state examination, which provides the professional qualification for a preparatory service. Therefore, expenses for the legal clerkship for lawyers and trainee teachers after the first state examination can be deducted in full as income-related expenses.
• The Bachelor's degree is also considered a professional qualification from an initial degree. A subsequent degree programme is a second degree, so these expenses can be deducted in full as income-related expenses. This mainly applies to a Master's degree, as it cannot be undertaken without a completed Bachelor's or other degree.

After many years of uncertainty, the Federal Constitutional Court has declared the current legal regulation to be constitutional. The fact that expenses for initial vocational training or an initial degree cannot be deducted as income-related expenses does not violate the Basic Law (BVerfG decision of 19.11.2019, 2 BvL 22/14, 2 BvL 23/14, 2 BvL 24/14, 2 BvL 25/14, 2 BvL 26/14, 2 BvL 27/14, published on 10.1.2020).

(2023): Legal situation regarding first degree and tax deduction of expenses

Can I deduct travel expenses for vocational training?

As part of vocational training, travel expenses could previously be deducted - as with off-site work - using the actual costs or the business travel allowance of 30 cents per kilometre travelled. The commuter allowance generally did not apply, as this is only relevant for journeys between home and a "regular workplace" (until 2013). However, since 2014, for full-time educational measures outside of employment, the educational institution is considered the "first place of work". This also applies to vocational training.

This means: Journeys to the educational institution can now only be deducted using the commuter allowance of 30 cents per kilometre (38 cents from the 21st kilometre onwards).

As off-site work can no longer be assumed, meal allowances and accommodation costs are no longer recognised. This applies both in the case of further training for the deduction of income-related expenses and in the case of training for the deduction of special expenses.

You can still claim travel to an educational institution outside the "first place of work" with the business travel allowance of 30 cents per kilometre travelled and also deduct meal allowances, e.g. when attending vocational school.

When is a full-time educational measure or full-time study applicable?

This is the case if it is vocational training or further training and you are not engaged in any employment alongside it. However, employment of up to 20 hours per week, marginal employment or short-term employment is not detrimental.

The home office allowance of 6 Euro per day (max. 1,260 Euro) is also available to those who are studying, training or undergoing further education and spend more time learning at their home computer than in lectures or classroom-based learning. The condition for the deduction is that you did not visit the university or training institution on the respective day.

(2023): Can I deduct travel expenses for vocational training?

What can I deduct for full-time training or education?

Kosten für training or further training can be deductible as income-related expenses, business expenses, or special expenses. Expenses for initial vocational training outside of a training service relationship and for a first degree are - at least according to current legal status - only deductible as special expenses up to a limit of 6,000 Euro.

In other cases, expenses can be deducted as income-related expenses or as pre-employment expenses without limit. This also applies to new vocational training after completing an initial training, as well as vocational training within a training service relationship, e.g. apprenticeship, traineeship. Important items include travel, meals, accommodation, and incidental travel expenses.

If you, as an employee, participate in a training measure outside your company as part of your employment, it is considered an off-site activity. You can claim your expenses according to travel expense principles - i.e. travel costs with the business travel allowance, meal allowances, incidental travel expenses, and possibly accommodation costs - as income-related expenses.

This applies to individuals who continue their education or training alongside their job in the evenings and at weekends. This has been the case so far and continues to apply.

However, the situation is different if you undertake a full-time training measure or full-time study outside your employment:

(1) Until 2013, the educational institution does not become a "regular workplace" if an employee undertakes a long-term training measure and visits the educational institution for over four years. This is also because it is not a company facility of the employer. Travel expenses can therefore be deducted according to the rules for off-site activities with the business travel allowance and meal allowances (BFH rulings of 9.2.2012, VI R 42/11 and VI R 44/10).

(2) However, since 2014, it is stipulated in the law that for full-time education, the educational institution is the "first place of work" (even though it is not an employer's facility). This means: Journeys are only deductible with the distance allowance, and meal allowances are not considered. This applies both to further training for unlimited income-related expense deduction and to training for limited special expense deduction.

This is the case if it is vocational training and you are not engaged in any employment alongside it. However, the following are permissible:

• employment up to 20 hours per week,
• marginal employment (mini-job), or
• short-term employment (temporary job).

Currently, the Lower Saxony Finance Court has ruled against the tax authorities that part-time study is not a full-time training measure because part-time study is not designed for the student to devote themselves fully to it. Rather, part-time study (here: according to the description of the Fernuniversität Hagen) is designed to be pursued alongside employment. "The understanding of the Federal Ministry of Finance, according to which a course of study or training measure is always a full-time course of study or full-time training measure in the event of unemployment, cannot be derived from § 9 Abs. 4 Satz 8 EStG" (Lower Saxony Finance Court of 16.2.2022, 4 K 113/20).

(2023): What can I deduct for full-time training or education?

When can a home office be deducted during training?

According to current law, expenses for initial vocational training and first-degree studies outside of a training service relationship (e.g. apprenticeship) are deductible as special expenses up to 6,000 Euro. The costs for a first degree following an apprenticeship or for further training can be fully deducted as business expenses.

This may also include the costs for a home office, but only if it is the centre of all business and professional activities. In this case, either the actual costs of the home office or an annual allowance of 1,260 Euro can be deducted.

Tip: If the home office is used to generate income and is the centre of all business and professional activities, the expenses or the annual allowance should be allocated according to the extent of use and the activities performed there. However, it is also acceptable to allocate the expenses or the annual allowance to a single activity without splitting them.

If the centre of all activities is not in the home office, only a daily allowance of 6 Euro per day can be deducted, up to a maximum of 1,260 Euro. The daily allowance applies per calendar day and does not increase even if different business or professional activities are carried out on one day, for which the deduction conditions are met. The condition for the deduction is that the university or training institution was not visited on that day.

If you deduct the daily allowance as business expenses or work-related expenses for professional activity in your home, an additional deduction as special expenses is not possible.

(2023): When can a home office be deducted during training?