Werbungskosten

Werbungskosten are tax-deductible expenses that arise in connection with earning income. In German tax law the term covers a broad set of costs and is especially relevant for employees (income from non-self-employed work), though certain costs in other income categories can also be eligible. The purpose of Werbungskosten is to reflect expenses necessary to generate income and thereby reduce the taxable income.

Typical examples include commuting costs (the Entfernungspauschale), professional travel and overnight stays, costs for work equipment and tools, special clothing for work, and fees for professional associations. Further items are costs for continuing education and training, books and electronic media used for work, costs of a second home (Doppelte Haushaltsführung), and job application expenses. Home office expenses can also be deductible if the space is used predominantly for work.

Tax treatment: employees generally can claim Werbungskosten either through the standard lump-sum deduction known as the Arbeitnehmer-Pauschbetrag or by itemizing actual, verifiable expenses. If actual expenses exceed the lump sum, taxpayers should submit detailed receipts and records with the annual income tax return, using the appropriate forms (for example Anlage N). Costs must be directly related to earning income and kept separate from private expenses to qualify.

Limitations and notes: not all costs are fully deductible, and some categories are subject to specific rules or caps. Private, non-income-related expenditures typically do not qualify. Werbungskosten also interact with other tax provisions, such as special allowances and other deduction rules, depending on the taxpayer’s overall situation.