EU and SPD seek home office tax breaks
In the midst of the ongoing COVID-19 pandemic, German politicians are proposing tax relief measures to help employees working from home. Antje Tillmann (CDU) has called for a general allowance to alleviate additional corona-related hardships, benefiting not only employees but all taxpayers.
Finance politicians from the Union and SPD have suggested tax relief for citizens working from home, with a view to recognising the increased costs associated with remote working. A spokesperson from the Federal Ministry of Finance has also mentioned ongoing thoughts about further aid due to the corona pandemic, including tax measures.
The Federal Ministry of Finance has acknowledged the efforts of employees and parents working from home, stating that they deserve special recognition. To reflect this, a home office flat rate has been introduced as a pandemic-related relief measure. This flat rate allows employees to deduct home office expenses for tax purposes.
From the tax year 2020 to 2022, employees can deduct a daily rate of €5 for days they worked exclusively from home, with a maximum claimable amount of €600 per year (corresponding to 120 days). From the tax year 2023 onward, this rate has increased to €6 per day, and the maximum number of deductible days has risen to 210 days per year, with a maximum deduction of €1,260.
To qualify for this deduction, employees must have worked from home for the entire calendar day, and the deduction is considered as a work-related expense that reduces taxable income. Employees do not need to provide detailed invoices for the home office but can apply this simplified flat rate directly on their tax return if they worked exclusively from home on those days.
This deduction is separate from any specific employer compensation but is part of the income tax benefit for remote work arrangements brought about by the pandemic. The goal is to find a practical and considerate solution for the costs of home office without creating an unreasonable administrative burden.
The discussion on this tax relief will take place as part of the talks on the Annual Tax Act. A separate home office room used at least 90 percent for business purposes is a prerequisite for deducting home office expenses. The law for this tax relief will be discussed in the Bundestag for the first time on this Thursday.
So far, most employees have found it difficult to deduct additional home office costs from their taxes. Lothar Binding (SPD) has suggested deducting home office expenses for those working due to health protection. Antje Tillmann (CDU) and Lothar Binding (SPD) have spoken about this proposal to the "Süddeutschen Zeitung".
Every employee or entrepreneur has had additional burdens in the last months, according to Tillmann. The proposed tax relief aims to provide some relief and recognition for the hardships faced by workers during these challenging times.
Other business domains, such as finance, are also considering relief measures to aid individuals during the ongoing COVID-19 pandemic. The Union and SPD have advocated tax relief for citizens working from home, acknowledging the increased costs associated with remote work.
