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Germany Updates Foreign Business Travel Tax Deductions

by Ulrika Lomas, Tax-News.com, Brussels

18 November 2013


To guarantee planning certainty for taxpayers, the German Finance Ministry has published a letter updating and confirming the tax treatment of travel costs and travel allowances for business or professional trips conducted abroad, from January 1, 2014.

Under German law, the deductible lump sum allowances, accorded for food and accommodation costs incurred on foreign business trips, can either be paid tax-free by the employer or deducted from personal income tax as a business expense.

However, accommodation costs can only be deducted in the personal income tax return if proven by receipt. In this exceptional case, the actual amount may be deducted from tax as a business expense, rather than the lump sum allowance.

In accordance with Article 9 paragraph 4a number 5 of the country's income tax law (Einkommensteuergesetz), an updated list of the fixed lump sum deductions to be applied must be published annually. In the 2014 updated list, any changes in the lump sum amounts, compared to the list published on January 1, 2013, appear highlighted in bold.

The lump sum amounts granted per calendar day vary depending on the country in question. Furthermore, the allowances vary depending on the length of absence (at least 24 hours or over eight hours) and whether or not it is the day of departure or arrival.

For taxpayers traveling to destinations not specifically mentioned on the list, the lump sum allowance accorded for Luxembourg is to apply. For unlisted overseas territories of a country, the lump sum deduction applicable in the mother country is valid.

TAGS: Finance | tax | business | law | Luxembourg | food | Germany | tax breaks | individual income tax

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