Employees may not claim a deduction for payments under car-hire contracts

January 4, 2011

The German Federal Finance Court has ruled deductions from income for travelling to and from work are limited to the published rates based on distance travelled.

The employee claimed that expenses for car leasing costs could be claimed as this was a necessary expense in commuting to and from work.  The Court found that a deduction of actual expenses is not possible.   Deductions are limited to the published mileage rates applicable to the commute.

The situation is different for costs for the use of the employee’s own car when the employee may calculate the actual costs per kilometer travelled in his or her own car and claim a corresponding deduction from taxable income.


German Federal Finance Court: Decision dated 15 April 2010 (VI R 20/08)

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


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