Constitutional challenge to time limit for tax deductible subsistence expenses fails

January 4, 2011

The German Federal Finance Court confirms that deductions for meal allowances is limited to 3 months.

Where employees are working away from their usual place of work, for example at a client’s premises or if they are on secondment to a Group employer they may claim travel expenses and also subsistence meal allowances as a deduction against income on a per diem basis according to published rates. 

In general under the German constitution costs relating and incurred in earning income are deductible for tax assessment purposes.  Refusal to follow this rule by the courts must be based upon a reasoned justification.  In this case
The German income tax act limits the subsistence meal allowance deduction to a maximum 3 month period on the basis that within such period the employee should be able to make other arrangements to reduce the additional meal expenses to nil.  In this case an employee on secondment challenged the three month limit on the basis that the constitution should allow employees a full deduction in such circumstances where they incur additional costs as a result of having to maintain two households in order to carry out such duties away from the employee’s main place of work. 

However, the court rejected the claim on the basis that the 3 month limit was sufficient for such an employee to make alternative arrangements to eradicate such additional expenses.


The decision of the German Federal Finance Court fails to reflect that, in practice, these additional subsistence costs continue to be incurred after the arbitrary 3 month period allowed.


German Federal Finance Court: Decision dated 08 July 2010 (VI R 10/08)

For further information or to discuss the issues raised, please contact Joachim Menz on +49 89 24 22 300


CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *