Taxes: long-term deployment can become a tax trap for self-employed individuals
If freelancers work with clients for the long term and rent an apartment on site, the tax office may classify this as a permanent business location. The consequence: Fewer costs can be written off.
A German IT consultant's case has been decided by the Bundesfinanzhof (Federal Fiscal Court) regarding tax deductions for a second home near his workplace. The consultant worked mainly for one client from 2016 to 2018 and had a second home near the client's location, claiming costs for the apartment, food, and travel. However, the tax authority considered the second home a business location, limiting his tax deductions to those allowed for weekly family home trips, and the court upheld this decision.
The court ruled that a business location requires a permanent, location-bound business establishment that is regularly visited, which can be in a client's or customer's premises.
Written by urgent.news from Handelsblatt's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
