The new home office flat rate
Tax deduction of labor costs
15 January, 2021 by
The new home office flat rate
manaTec GmbH, Sophia Grünig
 

The COVID-19 pandemic changed everything - our entire daily lives: when and how we shop, who we meet and where, how we spend our free time and travel, and also how we work and where.

As a result, the pandemic brought the term "home office" into sharper focus - in no previous year has it been used and discussed as frequently as in 2020. Behind the Anglicism is the word telecommuting, which is a flexible form of work in which employees do all or part of their work from their homes.

Already used by some before 2020, telecommuting allows many millions of workers not only to reduce Covid-19 contagion, but to easily combine family and work, to manage their time freely, and to eliminate the need to travel to work. However, in addition to the numerous advantages that make the remote office popular with many workers, it also comes with disadvantages such as social isolation, a poorer flow of information, and even a more difficult separation of private and work life. Likewise, access to private resources results in higher costs (heating, electricity, telephone), especially in the winter months - calculations by the comparison portal Verivox show a 4 percent increase in the heating requirements of a sample household in a home office.

Working from home offers both advantages and disadvantages.
Working from home offers both advantages and disadvantages.

The controversial issue of a home office

The question quickly arises as to whether costs incurred for the remote office can be deducted for tax purposes. Up to now, it has been possible to have the costs for a home office recognized by the tax office - if it is a separate room that is used almost exclusively for business purposes. But what does "almost exclusively professional use" actually mean? In 2016, the German Federal Fiscal Court ruled that expenses for "a room that is integrated into the domestic sphere and a not inconsiderable part of its area is also used privately" can be taken into account in the tax return as business expenses or income-related expenses.

So not all home offices are the same - a remote office is only recognized for tax purposes if it is an enclosed room furnished like an office and used almost exclusively for work. According to Uwe Rauhöft of the Bundesverband Lohnsteuerhilfevereine (BVL) in Berlin, the rule of thumb is: 90 percent of the use should be approximately professional and only 10 percent private. If the quite complicated conditions are fulfilled, the taxable income can be reduced by up to 1200 euro per year. Additional costs for office furniture are taken into account separately, but are associated with further, significantly stricter requirements and regularly cause disputes with the tax authorities.

The new remote office allowance

Thus, a major point of criticism is obvious: many employees do not have a separate workroom that is officially recognized. Due to the Corona pandemic, many had to and still have to work in an improvised remote office - whether in the living room, at the kitchen table, in bed with the laptop on the lap - true to the motto "necessity is the mother of invention". Apart from increased electricity costs, those affected have so far been able to declare very little in their tax returns.

In order to provide further tax relief for employees who resort to the remote office but do not have a separate office, the idea was born to create a flat-rate tax allowance of 5 euros per day, up to a maximum of 600 euros per year. It is also intended to compensate for the lump-sum commuting allowance that is no longer applicable for many employees. According to CSU finance politician Sebastian Brehm, this so-called "home office lump sum" is a flexible, unbureaucratic and easily comprehensible answer to the previous encrusted jurisdiction on the home office. On December 9 of last year, the Federal Ministry of Finance passed an amendment to the draft annual tax law submitted by the federal government at the request of the coalition. This includes various changes, including the aforementioned flat rate, which will be granted in 2020 and 2021 if the work activity was carried out exclusively in the domestic apartment.

The Taxpayers' Association, which called for tax compensation for remote office employees, welcomes the idea and considers it a good approach. Nevertheless, there is a catch: the remote office allowance is offset against the lump sum for advertising costs (employee lump sum) of 1,000 euros. This means that anyone who does not exceed the employee lump sum of 1,000 euros per year with the remote office lump sum will not benefit from the new regulation. Only those who already have high income-related expenses will benefit. A home office lump sum independent of and in addition to the employee lump sum is legally questionable, according to the Federal Ministry of Finance.

Experts assume that the home office lump sum will not be sufficient for taxpayers who otherwise have a longer commute than 15 kilometers per day to avoid additional tax payments. The reason for this is the 600-euro cap on the home office allowance.

The remote office allowance can be deducted for tax purposes via the income-related expenses.
The remote office allowance can be deducted for tax purposes via the income-related expenses.

Conclusion on the home office flat rate

In principle, the idea and implementation of the home office flat rate is a good approach, which is much more flexible and tangible for many employees than the concept of the home office, since the Corona pandemic often means that sporadically set up workplaces have to serve as home offices. But for commuters who now work from a home office, it will usually not be enough to compensate for the loss of the commuting allowance. In Germany, commuters travel an average of 17 kilometers - in states such as Mecklenburg-Western Pomerania, Brandenburg and Saxony-Anhalt, the average is even more than 30 kilometers, which means compensation of only 50 percent.

However, one should not be discouraged by this - according to the advice of the Association of Taxpayers, it is worthwhile to regularly document the domestic workplace with photos. The income tax assistance association Vereinigte Lohnsteuerhilfe (VLH) also advises collecting detailed records and evidence of the use of the home office and, in preparation for the tax return, to think carefully about which costs can be deducted from the home office during the corona period.


Sources: https://rsw.beck.de, www.steuern.de, www.zeit.de, www.wa.de, www.steuertipps.de, www.gruenderlexikon.de

 
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