Germany: Expenses claim for temporarily posted employees

January 12, 2010

An income tax information brief issued by the Rhineland Regional Finance Office has clarified the tax implications for employers posting their employees temporarily to an affiliated company.

The guidance highlighted the differing tax positions related to two specific types of posting.  In the first type, the employment relationship with the current employer is suspended during the period the employee is sent to the affiliated company.  The affiliated company concludes an independent employment contract with the employee for the period of posting.  From the beginning, the employee has a regular work place in the stationary permanent company establishment of the (new) employer if he goes there continuously.  If this is the case, the expenses resulting from activity in the domestic country can only be taken into account in the context of maintaining two households.

In the second type, the employer posts the employee in the context of the existing employment relationship temporarily (for a limited period) to the receiving affiliated company.  The employee is employed in this company exclusively on the basis of posting by the employer; an employment contract with the affiliating company is not concluded.  By virtue of it being a temporary posting, the employee doesn’t establish a regular work place in the receiving company. In this case, the expenses resulting from the work in the host company are to be treated according to the usual principles of external activities.

In terms of accommodation costs and additional food expenses, there are also differing considerations.  If the employee maintains an apartment only at the new place of employment, accommodation costs are to be considered as expenses for private living, and accommodation costs cannot be deducted as income-connected expenses nor be reimbursed tax-free by the employer.  In order to determine the additional food expenses which can be deducted/reimbursed tax-free, the period of absence from the apartment is decisive – a period of three months is required.

However, if the employee keeps his current apartment, which is at his disposal at any time, and if he maintains an additional apartment at the new place of employment, the accommodation costs resulting from professional activity can be tax deductible as income-connected expenses or reimbursed tax-free by the employer.  If the apartment at the place of work is also used by family members of the employee, the expenses for the apartment have to be apportioned between work and private use.

Regional Finance Office Rhineland, brief information Income Tax No. 34/2010 dated 12th July 2010

For further information or to discuss any of the issues raised, please contact Joachim Menz ( on +49 89 242 2300.

Keller MenzCELIA Alliance


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