Tax allowance - work-related (income-related) expenses/special expenses
- Name of the instrument - Local language
- Steuerliche Absetzbarkeit als Werbungskosten/Sonderausgaben
- Name of the instrument - English translation
- Tax allowance - work-related (income-related) expenses/special expenses
- Scheme ID
- 50
- Country
- Germany
- Reporting year
- 2020
- Type of instrument
- Tax incentive for individuals
- Sub-type of instrument
- Treatment of work/profession related training costs
- Type of entry
- Single instrument
- Short description
Adults can deduct costs related to continuing vocational training for their current occupation or a future occupation from the base of their individual income tax. The state co-funding - in the form of foregone tax revenues - equals eligible costs multiplied by the marginal tax rate (between 14 % and 45 %). Co-funded training is expected to sustain or increase future income, implying higher tax revenues later on. Eligible costs include tuition fees, costs for teaching material and professional literature, related travel and accommodation costs as well as the costs of a computer. For the deduction, a ceiling is introduced (EUR 6 000 in 2019). Individuals with no taxable income (an annual gross salary below EUR 9 744) cannot profit from the tax deduction. The tax incentive can be used once in each calendar year.
- Level of operation
- National
- Name of a part of the country
- Not applicable
- Name of the region (for regional instruments)
- Not applicable
- Name of the sector (for sectoral instruments)
- Not applicable
- Relevance
- Key instrument
- Legal basis
- §9 and §10(1) No 7 EStG German Income Tax ActLaw on Amendments to the Tax Code and other laws 21.7.2004 (§ 10 para. 1 no. 7 EStG)
- Objective(s) and target(s)
- Not available
- Year of implementation
- 2004
- Operation/management
- The scheme is part of the federal taxation system. Costs for education and training reduce the base of the tax calculation.
- Eligible group(s)
- Employees and self-employed
- Group(s) with preferential treatment
- No preferential treatment
- Education and training eligible
- - Education (in general schools, colleages, unversities). - Training in a profession not related to the current employment and with the aim of changing the profession. - Further training in the current profession to expand or adapt to changing requirements.
- Source of financing and collection mechanism
- State (loss of tax revenue) Individual
- Financing formula and allocation mechanisms
- maximum amount: EUR 6.000 (reducing the tax base)
- Eligible costs
- Eligible costs reduce the tax base. The reduction is a benefit in line with the marginal tax rate (14 - 45%); however, training costs together with other eligible costs must be higher than a basic allowance for becoming effective. Details of tax treatment (depending on the type of education and training): - Education - Special expenses - Partial deductibility - Training not related to the current profession: special expenses - Partial deductibility - Furher training in the current profession: expenses deductible without limit - Retraining due to health reasons: extraordinary burdens (deductible without limit) Education and training costs can be classified as deductable only up to EUR 6000 as special expenses per calendar year.
- Volumes of funding
- Not available
- Beneficiaries/take up
- Not available
- Organisation responsible for monitoring/evaluation
- Federal Ministry of Finance
- Most relevant webpage - in English
- http://www.make-it-in-germany.com/en/for-qualified-professionals/workin…
- Most relevant webpage - local language
- https://www.bundesfinanzministerium.de/Content/DE/Downloads/Broschueren…
- Recent changes
No recent amendment
Recent changes in response to COVID-19
No changes
- Sources
- Dohmen, Dieter. (2013). Finanzierung beruflicher Weiterbildung in Deutschland. Report. Zeitschrift für Weiterbildungsforschung. H, 3, 61-84.
- Short description
- Level of operation
- Name of a part of the country
- Name of the region (for regional instruments)
- Name of the sector (for sectoral instruments)
- Relevance
- Legal basis
- Objective(s) and target(s)
- Year of implementation
- Operation/management
- Eligible group(s)
- Group(s) with preferential treatment
- Education and training eligible
- Source of financing and collection mechanism
- Financing formula and allocation mechanisms
- Eligible costs
- Volumes of funding
- Beneficiaries/take up
- Organisation responsible for monitoring/evaluation
- Most relevant webpage - in English
- Most relevant webpage - local language
- Recent changes
- Sources