Advertising expenses
Advertising expenses
How does the law define advertising costs?
According to Section 16 of the Income Tax Act (EStG), advertising costs are the expenses or expenditures incurred in acquiring, securing, or maintaining income. They occur only in the case of non-business income sources. These include income from:
- non-self-employed work,
- Capital assets,
- Rental and leasing as well
- Other income.
There must be an (objective) connection to the professional activity. The necessity and appropriateness of expenses are not examined.
For adults with non-self-employed income, advertising costs are deductible without proof of a flat amount of €184 per year, unless a pension deduction amount is available. Certain advertising costs are not eligible for this flat amount. In case of higher advertising costs, these can be claimed alternatively to the advertising costs allowance.
Below you will find a list of the most important advertising costs:
capital allowances
Taxes
Backpack
Antiques
Work meals
Work clothes
Tools of work
Office room & workplace allowance
Training, further education and retraining costs
Professional groups discount
Employee share contribution
Application costs
Guarantees
Computers
Enduring burdens
Business travel
Dual household management and family house moves
Expatriates
Professional literature
Travel expenses
Penalty payments
Driver's license
Building
Low-value assets
Union membership fees
Internet
Meeting fees
Motor vehicles
Commuter allowance
Legal costs
Legal advice costs
Travel costs
Estimates (renting and leasing)
Interest on debt
Social security contributions
Language courses
Tax advice costs
Penalties
Tuition fees
Study trip
Phone costs
Moving costs
Insurance contributions
Housing development funding contributions
Replacement for wear and tear:
The AfA must be claimed by the economic owner. In the case of co-ownership, the AfA is divided.
- Building
The building must not be included in operating assets (otherwise: operating expenses). The AfA must be based on the actual purchase or production costs. Land is not depreciable; therefore, an appropriate portion must be deducted. In the case of a free-of-charge acquisition, the AfA of the predecessor company must continue.
For buildings that serve to generate income from rental and leasing, 1.5% can be written off annually without proof of use. This corresponds to a useful life of 66.6 years. A shorter useful life must be proven by a technical expert report.
For purchased built-up plots of private property, an explicit flat-rate split ratio of 40% for land and 60% for buildings is provided. A different split ratio than this can be demonstrated in individual cases through a corresponding expert opinion.
From 2016 onwards, for income from rental and leasing, among other things, a uniform distribution over 15 years can be requested for extraordinary technical/economic depreciation (previously, a distribution over 10 years was possible).
- Other business goods
Here too, the actual acquisition or production costs must be taken into account. In the case of free purchase, the fictitious acquisition costs must be deducted. Low-value goods (up to a limit of €1,000) can be disposed of immediately.
Taxation is deductible provided it relates to economic goods that serve the taxpayer to generate income. It only covers regular recurring taxes (e.g. the property tax), but not one-time taxes such as the acquisition tax, which is counted as the cost of acquisition (see "Depreciation").
A briefcase predominantly used for professional purposes is eligible for deduction.
see article "Operating expenses for antiques"
Work meals with at least a predominant promotional character are eligible for deduction as advertising costs in half. The term "advertising" is not clearly defined. Essentially, it is understood that product or service information must be provided. There must, in any case, be a professional reason for the meal. Furthermore, it is advisable to prove the promotional character of a work meal using business documents.
Special case of working meals during a trip:
A working meal (with promotional character) on an domestic trip cuts the daily allowance (see below: "Travel costs") by €15.00. In the case of international trips, there is no reduction; however, only one third of the respective maximum rate is available for two working meals.
see article "Operating expenses for work clothing"
According to the case law, the term “means of production” is to be interpreted broadly: This term includes all the tools and equipment that are necessary for the performance of the work to be performed by the employee and that are not provided by the employer. However, expenses for the acquisition of means of production are only advertising costs if the work cannot be performed without these tools and equipment; that is, the relevant expenses for securing and maintaining the taxpayer’s revenue are unavoidable. It is not necessary for the employer to arrange for the purchase of the means of production.
Typical work tools include, for example, cars, computers, telephones, the Internet, and specialized literature (see below).
Office room & workplace allowance:
see article "Operating expenses for the work room". Expenses for a home office are only eligible for deduction if it forms the center of the entire professional activity. If this is not the case (e.g., in case of daily home office), the workplace allowance can be claimed. This amounts to up to €300 per year if there are no other income from an active employment activity for which a desk is available, otherwise €150.
Training, further education and retraining costs:
Training costs are costs incurred by learning a profession. They are deductible if they are related to the professional activity exercised by the taxpayer or a related professional activity.
Continuing education costs are expenses intended to improve existing professional knowledge and skills. In order to qualify for a deduction, the continuing education costs must also be related to professional activities already undertaken.
A switchable retraining situation exists when comprehensive retraining measures are aimed at the actual pursuit of another profession.
- Driving license:
Costs for a driver's license for a passenger car or motorcycle are included in the costs of private living expenses and are not tax-deductible. Expenses for acquiring a driver's license for a truck or bus can constitute advertising costs. - Language courses:
A prerequisite is a professional reason and a concrete benefit for the profession. Language courses abroad can constitute a study trip. - Tuition fees (university of applied sciences, university):
The prerequisite is that the taxpayer is engaged in a professional activity in addition to their studies. This includes part-time jobs or occasional employment. In particular, a reduction in hours as comprehensive retraining is considered. - A study trip must be almost exclusively arranged for professional purposes. If a clear separation into professional and private travel sections is possible, the travel and travel costs may be split.
There is a (near) exclusive occupational reason if - Planning and conducting the trip in a manner that is in accordance with the course curriculum or in any other way that clearly demonstrates the professional nature of the activity,
- the taxpayer should acquire knowledge that allows for a specific use in his profession,
- The travel program and implementation are restricted to the professional group of the taxpayer only, and
- Generally interesting program elements only occur within the framework of a "normal" leisure activity.
The reimbursement of training costs to the employer due to early termination of the employment relationship constitutes advertising costs. In the case of an employment relationship that is still in effect, these advertising costs must be taken into account in personnel accounting.
By decree of the Federal Minister of Finance, average rates have been set for certain professional groups that apply instead of the advertising costs allowance of €184 (see above). In the event of higher advertising costs, actual costs may alternatively be claimed. These professional groups are:
- Artists
- Stage actors, film actors
- Television producers
- Journalists
- Musicians
- Woodworkers, foresters and professional hunters in the field service
- Housekeepers
- Domestic workers
- Representatives
- Members of a city, municipality or village council
The occupational group allowance is claimed as a deduction from employees' income tax.
These are explicitly advertising costs.
Costs for (even unsuccessful) applications and interviews are recognized as advertising expenses. Proof of this is required. Travel expenses and/or mileage allowances, day and accommodation allowances, can also be claimed. With regard to the latter, it is important to note that it is only eligible if a night stay is required.
If the guarantee relates to non-self-employed activities (e.g., securing employment), advertising costs may exist. Guarantee payments made by a managing partner of a capital company are generally not recognized as advertising costs, because their justification is primarily considered to be within the scope of the company’s business relationship, not in the employment context.
As a rule, a four-year lifespan is assumed for a computer (see "Depreciation for wear and tear" above). The costs for a (also) professionally used computer are deductible. The proportion of private use is to be deducted from the advertising costs. If the computer is located in the taxpayer's home, the tax authorities will assume at least 40% of private use. Higher professional use must be proven.
Continuing burdens is a general term that includes pensions and other ongoing costs. A pension consists of regular payments that are made based on a claim for them. Pensions are not to be equated with installment payments; pensions have an aleatory element, meaning that the end of pension payments is tied to an uncertain event (e.g., death pension). Other ongoing costs are paid over a longer period (at least 10 years). Both pensions and other ongoing costs must involve an obligation to provide a benefit.
The law explicitly lists permanent charges as advertising costs, provided that they are related to a form of income. The deduction is permitted only to the extent that the sum of the spent amounts exceeds the value of the consideration. In cases where no advertising costs are present, permanent charges may constitute special expenses.
A business trip occurs when an employee, at the employer’s request, leaves his place of work to perform service duties or works so far from his permanent residence that a daily return to his permanent residence is not feasible (approximate rule: from about 120 km). Kilometer, daily and overnight allowances paid by the employer for a business trip are tax-free because travel expenses are not income to the employee. If the employer pays higher amounts than the legally stipulated amounts, these constitute taxable wages exceeding the respective limits.
The tax-free mileage allowance is a uniform €0.50 per kilometer (for cars, motorcycles, and bicycles), and is limited to a maximum of 30,000 km per calendar year. A logbook must be kept.
As a general rule, daily allowances are tax-free for domestic business travel up to a maximum of €30.00 per day. The business trip must last longer than three hours.
Overnight charges are included in the cost of the overnight stay. Alternatively, overnight charges can be claimed according to the statutory rates, which in Germany are €17.00 per night including breakfast.
(Differential) advertising costs can be claimed if the employer does not provide full travel reimbursement or does not provide it at all.
Distinguish business trips from travel (see below)!
Dual household management and family house moves:
In the event that a daily return to the family residence is not feasible for the taxpayer (the standard distance is approximately 120 km), and he/she therefore takes an apartment near his/her place of work, the expenses for this apartment (rent, operating costs, furnishings) can in principle be deducted as business expenses. The double household management must be professionally motivated; a relocation of the family residence must not be unreasonable. Furthermore, there must be an additional use beyond the function of accommodation. A relocation of the entire family residence is considered unreasonable in particular when the spouse earns income from an employed activity at the family residence and this does not represent merely a subordinate extent.
For an apartment in which the taxpayer and their family live, expenses of up to €2,200 per month (rent and operating costs) can be deducted.
In the case of double-billing, costs of family travel are deductible as advertising expenses, up to a maximum amount of €306.00 per month.
Under certain conditions (including a maximum of 5 years in Austria, foreign employer, no residence in Austria within the last 10 years), expatriates may claim a promotional expenses allowance (in lieu of actual promotional costs) of up to €10,000 per year. These flat-rate promotional expenses must be taken into account in the employer’s payroll calculation. In the case of higher actual promotional costs, claiming them through employee taxation is advisable.
Professional-use literature (e.g., books, magazines) is considered advertising costs, unless it is general-education literature or daily newspapers. In some cases, it is necessary to disclose the essential content of the works.
Costs for professionally arranged trips are advertising costs that can be claimed in their actual amount. Instead, the official mileage allowance can also be deducted. The mileage allowance (0.50 €/km) is available up to a mileage of a maximum of 30,000 km per calendar year. A logbook must be kept.
Travel between the home and the workplace is excluded from the traffic allowance (see below) and, if applicable, the commuter allowance (see below).
Distinguish travel costs from travel expenses (see below)!
Cash-flow deficits that are replaced by the employer are advertising costs.
see "Training, further education and retraining costs"
s.o. "capital allowances"
see article: "Operating expenses: Invaluable goods". Business assets up to a limit of €1,000 can be fully depreciated in the year of purchase.
These are advertising costs.
As with computers, professional-related internet costs are deductible. If private use is also involved, the costs are split. The private portion is, at best, deductible through an estimate. Expenses for special professional applications such as legal databases are also deductible.
Meeting fees are explicitly listed as advertising costs in the law.
If a private vehicle (which does not have to be the owner’s own) is used for professional purposes, these costs can be deducted either in the amount actually proven or in the form of mileage reimbursement (0.50 €) as advertising expenses. If the mileage exceeds 30,000 km per year, either mileage reimbursement for 30,000 km or the actual expenses for all trips may be allocated.
With the mileage allowance, most costs related to the vehicle are considered deductible (fuel, service, vignette, insurance, including taxes, etc.).
A logbook must be presented upon request from the tax office.
Travels by an employee between their home and place of work are generally exempt from the traffic allowance (see below). In addition, a commuter allowance (as well as a commuter euro) can be claimed if
- the use of a public transport means is reasonable and the distance between the apartment and the place of work is at least 20 km ("small commuter allowance") or
- the use of a public transport means is not at least feasible for half the working distance and the distance is at least two kilometers ("large commuter allowance").
Please note that the provision of an Öffi ticket (e.g. Klimaticket) by the employer is tax-free, but this excludes the entitlement to the commuter discount for that route.
The amount of the commuter allowance or commuter euro that may be due is determined using a commuter calculator.
Professional-related costs for a civil lawsuit, e.g., labor law claims, are advertising costs. Costs for legal or administrative criminal proceedings are deductible only in the event of (partial) acquittal or dismissal of the proceedings due to a grounds for decriminalization.
If legal advice is provided on a professional basis, advertising costs are incurred.
Unlike business travel, the professionally arranged trip does not require an order from the employer. It must be solely professionally arranged or, if separable, a division of travel costs takes place between a private and professional part.
A journey is considered to be a journey when the duration exceeds three hours, the taxpayer is at least 25 km from the center of activity and no other center of activity is established at the point of deployment.
Travel costs are either:
- Daily allowances (additional food costs) or
- Overnight charges or costs of an overnight stay
Travel costs are included regardless of whether there is a trip involved, except for trips between the home and workplace (see "Commuter allowance", "Travel expense allowance").
The maximum daily allowance is 30.00 €. Higher costs for meals are not included. Accommodation costs can be deducted either in the amount of the actual costs incurred or with a flat-rate of 17.00 € (including breakfast).
Different rules apply for foreign travel, depending on the country.
Valuation reports (rental and leasing):
If a valuation report is prepared for the purpose of acquiring a building, these costs are included in the purchase price (see "Depreciation for depreciation").
Interest on debt, i.e., interest on the lending of capital that is related to a type of income, is deductible.
Interest on debt related to the purchase, manufacture or maintenance of a rental property is eligible for deduction as advertising expenses from income from rental and leasing.
Interest on the purchase of work equipment is an advertising cost.
Social security contributions:
Compulsory insurance contributions in statutory social insurance are explicitly listed as advertising costs in the law.
see "Training, further education and retraining costs"
Payments to a business trustee whose primary activity consists of determining income from rental and leasing activities are advertising costs. Otherwise, if paid to a person authorized under professional regulations, they constitute special expenses.
see article: "Operating expenses"
see "Training, further education and retraining costs"
see "Training, further education and retraining costs"
Costs for professional phone calls are deductible in their actual amount. If a phone is used for both professional and private purposes, a split is made. If the split cannot be precisely determined, an estimate of the professional portion of the phone costs is made.
In the case of an obligation to change residence by the employer (e.g. obtaining a service apartment), advertising costs are incurred. Moving costs are also incurred due to the fact that the new place of employment is unacceptably far from the previous place of residence. Moving means that the previous place of residence is abandoned (see also "Double household management").
Purchase costs related to a residential property are not tax-deductible.
Insurance premiums for commercial properties that serve to generate revenue are tax-deductible (e.g., building insurance).
Housing construction promotion contributions:
These are explicitly advertising costs.
For detailed information regarding advertising costs, please contact us!
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