Law & Numbers - Expatriates

Germany: Costs of studies/training as tax deductible expenses


- Change of jurisdiction and legislation

With press release of August 17, 2011 the Federal Tax Court published two beneficial judical decisions concerning the tax deductibility of a first education as job-related expenses.

According to theses decisions dated July 28, 2011 (VI R 38/10 and VI R 7/10) the disallowance of specific job-related costs (Article 12 Nr. 5 German Income Tax Law/EStG) is not applicable, even if the taxpayer starts his studies immediately after having finished school. Article 12 Nr. 5 EStG would not genarally prohibit such expenses. In the decided cases (a medical study and an airline pilot training) the educational costs were sufficiently evidenced because of the subsequent profession of the taxpayers, so that the costs had to be considered as job-related expenses.

In the meantime, the tax administration initiated a change of the income tax law retroactively from 2004 onwards. If this law becomes effective in 2011, the favourable jurisdiction will be void at least from 2011 onwards. For the interim period 2004 to 2010, however, a retroactive change should not be constitutional.

In all cases of initial studies/training, we advise to check if and which expenditures can be claimed on the basis of the changed jurisdiction. In some cases, this can be done retroactively since the tax year 2004. Please contact us in order to help you personally or your children to save the tax advantages which result from this jurisdiction:

Björn Christian Gerow
Fachberater für Internationales Steuerrecht
Phone: +49-211-17257-15

For any questions concerning expatriates issues please contact :
Björn Christian Gerow (Germany)

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