If an employee is posted to a subsidiary company abroad for years, there may be variations in the arrangement of his professional expenses.
GRP Rainer Lawyer and Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London www.grprainer.com/en explain: With global and international businesses, it is highly likely that employees will be active at a subsidiary company abroad within the framework of their employment relationship. It is not uncommon for the primary residence in the home country to be retained.
The question thus arises in these cases as to what extent the maintenance of the foreign residence and the travel costs incurred can be claimed as professional expenses.
In its judgment of 14 January 2013, the Düsseldorf Finance Court had to deal with such a case. The claimant was initially posted for altogether six years, to a foreign subsidiary company of a German parent group. The entire family subsequently moved abroad, yet the primary residence in Germany was retained. The claimant initiated professional expenses claims for the rental expenditure pertaining to the foreign residence and for journeys between this and the foreign workplace.
The claim was dismissed by the Düsseldorf Finance Court because in the view of the judges, the point of reference for this decision was the duration of the employee’s post abroad. In the instant case, this stretched to six years. Thus, the foreign place of work could not be considered to be temporary, but rather a regular workplace.
According to the opinion of the Court, the centre of the claimant’s life was his work abroad. The maintenance of a residence in Germany could not therefore be considered from the perspective of maintaining a second household as an article of professional expenses. The Court did not therefore view the rental expenditure for the German residence as being tax deductible.
For the same reasons, the Court did not share the view of the claimant regarding the travel expenditure claimed and granted him merely the enforcement of the typical commuter’s allowance.
If a work-related placement abroad is imminent, one should carefully consider whether the additional maintenance of a residence in Germany is beneficial. A lawyer can advise on this topic.