(2023)
If the expenses for the instructor activity exceed the income…
Secondary occupations as instructors, educators, carers, nurses, and artists are tax and social security-free up to 3,000 Euro per year. However, this allowance is often not reached. The question is whether losses from such secondary occupations can be offset against other income.
Previously, tax offices rejected the recognition of losses from secondary occupations, as the expenses were related to tax-free income. Expenses are only recognised if they exceed the tax-free income and both exceed the allowance of 3,000 Euro.
However, the Federal Fiscal Court ruled that losses from such activities are also deductible if the income does not exceed the allowance. This requires that the activity is carried out with the intention of making a profit and is not a hobby.
The Frankfurt Regional Finance Office and the Bavarian State Tax Office have assessed many individual cases, e.g. doctors in disability sports, holiday supervisors, rescue workers, and city guides. Principles for the tax exemption of part-time activities have also been recorded in the brochure "Tax exemption for part-time activities according to § 3 No. 26 / 26a EStG". The activity must not exceed one third of the working hours of a comparable full-time job in the calendar year, based on a regular weekly working time of 14 hours.
If you have expenses for a subsidised secondary occupation but do not earn any income, you can still claim them as anticipated income-related expenses or business expenses (BFH ruling of 6.7.2005, BStBl. 2006 II p. 163). The tax authorities accept this decision (OFD Frankfurt of 28.12.2015, S 2245 A-2-St 213).
The Federal Fiscal Court recently ruled that losses from a part-time instructor activity are deductible even if the income does not exceed the allowance. However, the prerequisite for the consideration of the loss is that the activity is carried out with the intention of making a profit and is not a hobby (BFH ruling of 20.11.2018, VIII R 17/16).
