Can I claim a deduction for my home office?

Since 1 January 2023, new regulations apply for deducting expenses for a home office and working from home. Two scenarios are distinguished:

1. Home office as the centre of activity

If the centre of your professional or business activity is in the home office, you can deduct the actual costs or a flat rate of 1,260 Euro per year. This requires a separate room used almost exclusively for work. This regulation applies to, for example, writers, translators, or IT professionals who mainly work from home.

2. Not the centre, but work from home

If the professional activity is partly carried out from home without the home office being the centre, a daily allowance of 6 Euro for a maximum of 210 days (max. 1,260 Euro per year) can be deducted. The activity can take place anywhere in the home; there are no specific requirements for the workplace.

Particularities of the home office as the centre:

• Flat rate: The annual flat rate of 1,260 Euro applies for the entire year and does not need to be proven.
• Time share: If the home office is not used for the entire year, the flat rate is reduced monthly.
• Personal: The flat rate applies per person but cannot be used multiple times for different activities.
• No combination: The combination of annual and daily flat rates for the same period is not possible.

Examples:

• Example 1: A and B share a home office. Only for A is it the centre of activity. A can deduct proportional costs, B only the daily allowance.
• Example 2: Both use the home office as the centre. Both can deduct the flat rate of 1,260 Euro.

Home office without a dedicated room

Even without a dedicated room, taxpayers can deduct an allowance for working from home from 2023:

• Home office allowance: 6 Euro per day, maximum 1,260 Euro per year.
• Conditions: A separate room is not required. The allowance applies for work in the home, regardless of the workplace (e.g. kitchen table).
• Travel costs: Travel costs to the first place of work and the allowance cannot be combined. For off-site work, travel expenses and the allowance are permitted if the work is mainly done at home.

Special regulation: No other workplace

If no other workplace is permanently available for the professional activity (e.g. for teachers), the daily allowance and travel costs to the first place of work can be deducted simultaneously.

Examples:

• Example 1: A civil engineer can deduct travel expenses and the daily allowance if the work is mainly done at home.
• Example 2: An insurance broker cannot deduct the allowance if most of the work is done outside the home.

Can I claim a deduction for my home office?

Who can claim a home office?

The tax deductibility of expenses for a home office and its equipment depends on whether this office is the centre of all professional activities. From 2023, there is an option to choose an annual allowance of 1,260 Euro instead of the actual costs. This allowance can be reduced proportionally for each full calendar month in which the conditions for the deduction are not met.

The regulations apply particularly to professions such as writers, translators, and IT professionals who work mainly from home. A "real" home office is required, defined as an enclosed room.

In other situations, the home office allowance can be used, which is 6 Euro per day, up to a maximum of 1,260 Euro per year.

In addition, expenses for professionally used rooms at home can also be deducted without limit in the following cases,

• if it is not a home "office", e.g. a storage room, exhibition room, sales room, recording studio for a composer, studio for a painter, lawyer's office, practice rooms for a speech therapist.
• if it is not a "home" office. This is the case if the room is not integrated into the domestic sphere and does not form a structural unit with the residential part, e.g. renting an office in another house, additionally rented room in a multi-family house on a different floor from the private flat.
• if the office is open for intensive and permanent public access. In this case, the office is not considered a home office.
• if the room is considered a business premises for the self-employed. This may apply if the office is in close proximity to other business premises, e.g. next to the baker's flat are the bakery, the sales room, a staff room for sales personnel, and the office where bookkeeping is done.

Who can claim a home office?

When is the home office the centre of professional activity?

In Germany, you have the option to claim tax relief for expenses related to your home office, provided it is the centre of your professional activity. This is particularly relevant for professions such as writers, translators, and IT specialists who primarily work from home.

You have two options for claiming tax relief for your home office: you can either deduct the actual costs incurred by your home office or a flat rate of 1,260 Euro per year. In the case of the flat rate, the amount is reduced monthly if the conditions for the deduction are not met for the entire month.

It is important to emphasise that the type of income you earn does not affect the tax treatment of your home office. The crucial question is whether your home office is the main place where you carry out your professional activities.

The term "centre" refers to whether your home office is the place where the essential and defining activities for your professional work take place. The amount of time you spend in the home office is of secondary importance. What counts is the significance of these activities for your profession.

Examples where the home office can be the centre of professional activity:

1. Sales Manager: A sales manager who works in the field and carries out essential professional tasks such as organising business operations in their home office can consider it the centre of their professional activity (BFH ruling of 13.11.2002, VI R 104/01, BStBl II 2004 p. 65).
2. Engineer: An engineer whose professional work is characterised by developing theoretical solutions in their home office can consider their home office as the centre of their activity, even if they visit clients in the field (BFH ruling of 13.11.2002, VI R 28/02, BStBl II 2004 p. 59).
3. Practice Consultant: A practice consultant who advises medical practices on business management issues can consider their home office as the centre of their professional activity, even if they spend part of their working time in the field (BFH ruling of 29.4.2003, VI R 78/02, BStBl II 2004 p. 76).

Examples where the home office is not the centre of professional activity:

1. Sales Representative: For a sales representative, the focus of their activity is outside the home office, even if essential tasks are carried out in the office (BFH ruling of 13.11.2002, VI R 82/01, BStBl II 2004 p. 62).
2. Clerical Employee: A clerical employee who uses their home office for a secondary job does not have the centre of their overall professional activity in the home office (BFH ruling of 23.9.1999, VI R 74/98, BStBl II 2000 p. 7).
3. Doctor: A doctor who prepares reports and examines patients outside the home office does not have the centre of their professional activity in the home office (BFH ruling of 23.1.2003, IV R 71/00, BStBl II 2004 p. 43).
4. Architect: For an architect who carries out both planning and site supervision, no specific focus of activity can be assigned to their home office (BFH ruling of 26.6.2003, IV R 9/03, BStBl II 2004 p. 50).
5. Teachers and University Lecturers: Neither teachers nor university lecturers have their professional centre in their home office (BFH ruling of 26.2.2003, VI R 125/01, BStBl II 2004 p. 72 and BFH ruling of 27.10.2011, VI R 71/10, BStBl II 2012 p. 234).
6. Judge: The centre of a judge's professional activity is in the court (BFH ruling of 8.12.2011, VI R 13/11, BStBl II 2012 p. 236).

When is the home office the centre of professional activity?

When is no other workplace available?

If you do not have another permanent office for your professional activity, you can claim the costs for your home office for tax purposes. This applies to both employees and self-employed individuals. You can deduct a daily allowance of 6 euros per day, up to a maximum of 1,260 euros per year. An example of this is teachers who work at school but do not have their own workspace for lesson preparation. In this case, you can also deduct travel expenses to the school in addition to this allowance. It is no longer necessary to have a separate office; a work corner or the kitchen table is sufficient.

In certain cases, another workplace is not permanently available, and the daily allowance can be deducted in principle, even if travel expenses to the company or office are also claimed. For example:

• Teachers do not have their own desk at school for lesson preparation.
• Orchestra musicians have no opportunity to practise in the concert hall. The home is used for this purpose.
• The workplace provided is unusable for health reasons (BFH ruling of 26.2.2014, VI R 11/12, BStBl 2014 II p. 674).

In other cases where another workplace is available but does not meet the requirements of the specific professional activity, the daily allowance can also be deducted. For example, if an IT consultant is on call from home and cannot use the employer's workplace (BFH ruling of 7.8.2003, VI R 41/98, BStBl II 2004 p. 80).

The decision as to whether another workplace is available depends on objective criteria. Subjective opinions do not play a role. The workplace must be usable in the required manner. Another workplace is not available if you regularly cannot use another workplace for only a few days or weeks. In such cases, you can only deduct the daily allowance on days when you actually work from home and do not visit another workplace.

If you have several professional activities, the conditions for deducting the daily allowance must be checked separately for each activity. The daily allowance can only be deducted once per day, regardless of how many activities you perform.

It is important to prove that no other workplace is available for the respective activity. A corresponding certificate from the employer can be helpful here.

The daily allowance cannot be deducted if costs for a home office or the annual allowance for an office have already been deducted. The record-keeping requirements for a home office do not apply to the deduction of the daily allowance.

When is no other workplace available?

When can teleworkers claim tax relief for their home office?

As of 1 January 2023, the tax treatment of "home office" and "homework" has been redefined. There are two scenarios to distinguish between (§ 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. Home office as the centre

If the home office is the "centre" of your professional activity, the home office costs can be deducted as follows:

• Either the actual amount.
• Or with an annual allowance of 1,260 Euro as business expenses or operating costs.

It must be a "genuine" home office, used exclusively for work and containing no personal items. Examples include writers, translators, or IT professionals who work almost exclusively from home.

2. Not the centre, but work from home

If your home office is not the "centre" but you also work from home, you can claim the following for tax purposes:

• A daily allowance of 6 Euro for a maximum of 210 days per year, up to a maximum of 1,260 Euro per year.

The workspace in the home does not need to meet any special requirements, whether it is a work corner, the kitchen table, or a separate room.

Details on "Home office as the centre"

• The annual allowance of 1,260 Euro is a flat rate and does not need to be proven up to this amount.
• The option to deduct the annual allowance instead of the actual expenses applies uniformly for the entire year and can be exercised until the tax assessment becomes final.
• The annual allowance is considered on a monthly basis and is reduced monthly if the conditions are not met.
• The annual allowance is personal and cannot be claimed for different activities.
• A deduction of the daily allowance (6 Euro per day) for the same period is not permitted.
• If several people share a home office, eligibility is checked individually.

These are the new regulations from 2023 regarding the tax treatment of expenses for "home office" and "homework."

Example 1:

A and B share a home office with 50% usage each. The home office is the centre of business or professional activity only for A. The total costs are 4,000 Euro and are divided accordingly.

A can deduct 2,000 Euro as business expenses or operating costs, while B can only claim the daily allowance of 6 Euro per day for working in the home office.

Example 2:

A and B use a shared home office as the centre of their professional activity for the entire calendar year. They waive the division of costs and can each deduct the annual allowance of 1,260 Euro as business expenses or operating costs.

Details on "Work from home, but not the centre"

The tax relief for working from home has changed since Corona. Here are the key points:

• From 1 January 2023, the home office allowance is permanent and increased. The amount has been raised from 5 Euro to 6 Euro per day and can be claimed for a maximum of 210 homework days. The maximum amount is now 1,260 Euro per year.
• The term "home office allowance" has been changed by the legislator to clarify that it concerns professional activity in the home, regardless of whether it is the main or holiday home. Therefore, it is now referred to as a homework allowance or simply a daily allowance.
• No special requirements for the workspace in the home are needed to receive the daily allowance. It does not matter whether you work at the kitchen table, in a work corner, or in a separate room. All (additional) expenses for using the home are included in the daily allowance.
• The daily allowance is 6 Euro per day and can be deducted if more than half of the daily working time is spent at home. The total amount is limited to 1,260 Euro per year (210 days x 6 Euro). Costs for work materials can be deducted additionally.
• Employees with a recognised home office can choose between the annual allowance of 1,260 Euro and the daily allowance of 6 Euro per day; this cannot be done simultaneously. The deduction always refers to the entire business and professional activity.
• If taxpayers have different business or professional activities, both the daily allowance of 6 Euro and the maximum amount of 1,260 Euro can be allocated to different activities or assigned to one activity. The amounts cannot be deducted multiple times for different activities.
• In the case of double housekeeping or costs for a home office, an additional deduction of the daily allowance is not permitted.
• The daily allowance is offset against the employee allowance of 1,230 Euro, so tax savings only occur when total business expenses exceed 1,230 Euro.
• Taxpayers must record and substantiate the calendar days on which they claim the daily allowance.

The tax relief for working from home now offers greater opportunities to claim the associated expenses for tax purposes.

When can teleworkers claim tax relief for their home office?

Can the home office be taken into account during parental leave?

Expenses for a home office or the annual allowance can also be claimed as anticipated business expenses or income-related expenses during periods of non-employment, such as unemployment, maternity leave, or parental leave.

During parental leave, the costs for a home office can be considered as anticipated income-related expenses. This means that the costs are incurred during this time, even though the actual professional activity is temporarily suspended. Later, when you return to work, these anticipated income-related expenses can be taken into account in your tax return.

However, it is crucial to ensure that the conditions for recognising these anticipated income-related expenses are met, particularly the requirements regarding the home office. The office should be the centre of professional activity and be used significantly for work purposes.

The possibility of deducting the expenses or the annual allowance depends on whether these would also be justified under the expected circumstances of the later business or professional activity (see BFH ruling of 2.12.2005, VI R 63/03, BStBl II 2006 p. 329).

Can the home office be taken into account during parental leave?