BFG calls for the tax recognition of a home office

The requirements for the tax recognition of a home office are naturally strict. Thus, expenses or expenditures for a home office located within the housing association and its furnishings are not allowed to be deducted, unless the home office located within the housing association forms the focal point of the taxpayer’s entire business activities. Furthermore, for tax recognition, it is required that the space designated for the office is actually used exclusively or almost exclusively for business purposes and is also properly furnished accordingly. In a decision (GZ RV/7102468/2021 from 2.12.2022), the BFG had to decide whether the costs of a home office, despite the parallel existence of offices, can be tax deductible.

The initial situation was such that one taxpayer operated independently and employed employees of her principal client in her home office, in her practice at another location, and in the principal client’s office. In addition, workshops were held and health modules were offered. Importantly, office space was made available by the principal client for the immediate discussions as part of the work-psychological support. The preparation and follow-up of the discussions and workshops, the preparation of protocols for the principal client, and the telephone consultation of the principal client’s employees (a 24-hour availability was contractually agreed upon) took place in the principal client’s home office. Temporarily, approximately 60 hours were billed per month for the work-psychological support, with the preparation and follow-up in the principal client’s home office taking an additional amount of time.

The BFG recognized the expenses for the home office as a tax-deductible business expense. What is decisive here is that the activities of the taxpayers do not only consist of the conversation with the main contractor’s employees and the conduct of workshops, but that the preparation, follow-up and reporting are also essential in the interests of the client. The necessity to carry out these pre- and post-event activities in an office environment seemed to the BFG to be established, and thus the home office could also be seen as the focal point of the entire business activity of the taxpayers. In contrast, the tax office saw the focal point and focus of the entire business and professional activity in the office provided by the client.

Following the VwGH case law, the focus of an activity must be assessed according to its material scope, i.e., according to the typical professional profile. In other words, when assessing the midpoint of an activity, a comprehensive assessment of the operational or professional activity must be made. The fact that the main contractor provided an office for the activity in question also speaks in favor of it; although an office was provided by the principal contractor, it was only allowed to be used for direct communication and not for administrative tasks. It is therefore clear that, in material terms, the activity in the home office took precedence (mainly due to pre- and post-processing activities and administrative tasks). In terms of time, the work performed in the home office has also outweighed the work performed away from home, so all expenses and costs associated with the work room, including the costs of its furnishings, are eligible for deduction as business expenses.

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