If you decide on a new apartment or house as your place of residence, one of the most important consequences is moving. Depending on the size of your household, this can place a considerable strain on your budget. If you move for professional reasons, you can at least have part of the costs reimbursed. You then benefit from the flat-rate moving expenses. What exactly are they, and how much money is involved?
What are the flat-rate moving expenses?
The legislator supports professional flexibility and mobility. If you change your home for professional reasons, you can benefit from a flat-rate allowance for moving expenses. You can claim expenses up to a certain amount for tax purposes and thus reduce your tax burden. The sum set by the authorities is intended to ease the financial burden caused by moving home for professional reasons. The requirements are:
- moving for professional reasons to a new apartment (only the primary residence) in another city;
- a reduction in travel time of approximately one hour, whereby life partners and spouses may add their required times together, provided they involve different routes (the distance of the commute is not decisive);
- moving back to Germany from abroad;
- individual decisions leading to significantly improved working conditions, such as moving closer to the place of deployment for on-call service providers.
The flat-rate moving expenses do not apply in all other cases. However, there are special tax reliefs for moves for health reasons and for private moves.
Important: Changes since June 1, 2020
The legal framework changed on June 1, 2020. Reimbursement has been simplified in some areas. In addition, unlike before, single, married, divorced and widowed people in a household, as well as children to a certain extent, are now treated equally. Furthermore, the legislator continues to adjust the amount of the flat-rate moving expenses annually.
Which expenses can you claim under the flat-rate moving expenses?
This is a flat-rate amount. It specifies a maximum sum that reduces your tax burden when moving for professional reasons. However, you are required to provide proof of the expenses. There are only a few exceptions to the obligation to provide evidence.
The Federal Office of Administration refers in a "List under the Federal Relocation Expenses Act (BUKG). Accordingly, deductible costs include:
- Transportation expenses (transport costs),
- Travel expenses (for finding accommodation and other relocation preparations) in the amount of the mileage allowance,
- Rent compensation in the event of double rent burdens (for overlapping rental agreements) for up to six months for the old apartment and up to three months for the new apartment,
- Broker fees (only for rental properties),
- Transport damage,
- Costs for children’s tutoring, provided this is required due to the relocation (for example, because of a different performance level at the new school).
You must provide evidence of these costs. As a rule, an invoice/receipt (cash-register receipt) is sufficient. For the mileage allowance, the journeys with appointments may need to be listed and calculated using the shortest route.
You can also deduct further costs as a lump sum. No receipts are required for these. Such expenses include, for example:
- Fees for changing identity documents,
- Fees for re-registering vehicles,
- Tips and catering expenses for relocation helpers,
- Cosmetic repairs to the old apartment,
- Electrician and plumbing work, such as installing lamps and connecting stoves or dishwashers,
- Expenses for changing the telephone connection
How high is the relocation expense lump sum?
The amount of the lump sum changes every year. It consists of several components. The current rates are available on the website of the Federal Ministry of Finance. By way of example, the rates as of April 1, 2022 are stated as follows:
- The amount for tutoring costs for children who have problems at school or fall behind the learning objective due to the relocation increases from 1,160 euros to 1,181 euros as of April 1, 2022.
- The lump-sum amount for other costs (without receipts) increases from 870 euros to 886 euros as of April 1, 2022. For each additional person relocating and living in the same household, the additional lump sum increases from 580 to 599 euros as of April 1, 2022.
- The lump-sum compensation for people moving who have no accommodation on the day before loading their household belongings or after the move, it will increase from 174 euros to 177 euros as of April 1, 2022.
The new rate in each case is only valid if the household goods were loaded before April 1. Otherwise, the old rate applies in each case.
Surcharges for a second move
A special rule applies if you move twice within five years for professional reasons. In this case, the lump-sum moving allowance increases by 50 percent from the second change of residence onward.
How can you declare the costs of a work-related move to the tax office?
To use the lump-sum moving allowance, simply state the costs you have calculated in your annual tax return. In Annex N (income from employed work), there is a section called “Other income-related expenses.” This is where you enter the expenses.
If the tax office recognizes these expenses, it takes the total into account when reconciling annual wage tax or calculating annual income tax. If this results in a credit, it is paid out together with the usual tax refund. Moving costs therefore reduce the taxes you have to pay—or, in other words: the tax office reimburses you for these expenses.
Important: You only receive reimbursement for amounts that you can prove or that are deductible at a flat rate. Lower costs reduce the maximum lump-sum amount. If your costs exceed the upper limits of the lump-sum amounts, you will receive reimbursement of no more than the lump-sum amount. In this case, an alternative may be to have your employer cover the moving costs. You then lose the tax advantage, but you also have no or lower costs.
Does the lump-sum moving allowance apply to a private move?
If you organize a work-related move privately, you can also use the lump-sum moving allowance. However, the requirement is that you can prove individual expenses, as you would with a hired company. This applies in particular to expense reimbursements for helpers and privately rented vehicles. Without proof, the expenses cannot be taken into account.
A move for private reasons, on the other hand, is not covered at all. This also applies to any resulting tradespeople’s costs. Neither falls under the Federal Relocation Expenses Act. However, you can claim such expenses as household-related services up to a total amount of 20,000 euros in your tax return state. 20 percent of the expenses then reduce the income tax payable.
What happens when moving for health reasons?
Like a private move, relocating due to health impairments does not fall under the Federal Relocation Expenses Act. You therefore do not benefit from the flat-rate moving expense allowance. However, provided you can submit a medical certificate, these expenses are considered extraordinary burdens. You can therefore deduct these costs in full from your taxes.