Germany: Travel costs – welcome new rule on mixed business/non-business expenses
Clarification of treatment of travel costs with both a business and
Travel costs with business and private elements may be split into
deductible business costs and non- deductible private costs, provided
that both elements of the costs can be identified and the business part
is not insignificant.
This decision has been long awaited and it brings welcome
clarification of the treatment of travel costs with business and private
elements. It revises the opinion of the Federal Finance Court made in
1970 and removes the strict and general prohibition (stipulated in § 12
No. 1 EStG) on deduction of expenses with a mixed element (business and
private). Until now, travel costs with any level of mixed elements were
not deductible, even where some of those costs were incurred for
The costs are apportioned between business and private use, in
proportion to the time spent on the trip for business and private
purposes. In its decision, the Court expressly stipulates that detailed
and formal documentation of the journey is a requirement for a deduction
of travel costs to be allowable for tax purposes.
German Federal Finance Court: Decision dated 21.09.2009 (GrS 1/06)
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This article was produced by, and re-produced with kind permission
of, our correspondent firm in Germany, Keller Menz Rechtsanwälte. www.keller-menz.de