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A temporary home office – Strict rules for the deduction of costs for tax purposes

On account of the coronavirus pandemic, many people are currently newly working from home (home office). The question that arises is the extent to which the costs – in the form of a share of the rent, energy, etc. – for the room that is used for this purpose (a so-called home office) may be deducted against income tax.

Basic principles

If no other workspace is available for business or professional activities then the expenses associated with a home office up to an amount of € 1,250 may generally be offset against tax as work-related costs or business expenses. If the home office constitutes the professional hub then even the limit on this amount ceases to apply.

A home office may only be taken into account for tax purposes if it is separated from the other rooms in the rest of the living area. Claiming a deduction for a share of the rent would thus not be possible, for example, for a “work corner”.

Impact of the coronavirus crisis

During the coronavirus pandemic many companies have sent their staff home and asked them to work from there; even the self-employed and small businesses are increasingly moving their professional activities to their own homes. Consequently, if no other workspaces were available (at least temporarily) for employees then a deduction of the above-mentioned costs would be possible. However, specific evidence of the lack of any other workspace would have to be presented to the local tax office, e.g., by means of a certifying statement from the employer.

Furthermore, the taxpayer bears the burden of proving that the home office was used exclusively, or almost exclusively for business or professional purposes. However, a room that has been set up like an office but which, to a considerable extent, is also used for other purposes (e.g. as an ironing room) is, according to the view taken in case-law, not a home office. Although, private joint use of less than 10 % is not deemed to be detrimental from a tax point of view.

To avoid the associated disputes with the local tax office, it is therefore advisable, if necessary, to rearrange or clear out the room and to document this accordingly with photographs at the beginning and end of the period of use as a home office and to rule out an alternative use for the room.

Recommendation: The costs for the home office may be deducted on a tax return under the above-mentioned conditions. If the local tax office does not include the costs on account of a lack of documentary evidence of business or professional use then, with reference to the exceptional circumstances during the coronavirus pandemic, you should consider lodging an appeal and apply for a measure to be taken on equitable principles.

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