What can I deduct if my employer provides benefits for commuting to work?
In principle, the following applies: Such a subsidy from the employer is taxable, but the employer can tax it at a flat rate of 15 percent (see the note below on the new regulation of a flat rate tax of 25 percent). The amount taxed at a flat rate is exempt from social security contributions. The employer must note the amount taxed at a flat rate in the payslip, and you must enter this amount as travel expense reimbursement in your tax return (Form N, reverse side).
The tax office will accordingly reduce the deductible travel expenses and only recognise the remaining travel expenses as business expenses. If your employer provides you with a job ticket for the journeys, this is a benefit in kind. If the employer's contribution does not exceed 50 Euro per month, this amount is tax and social security free.
New since 2019:
Since 1 January 2019, employer benefits - subsidies and job tickets - to employees are tax and social security free under the following conditions for the following journeys:
- Journeys between home and first place of work,
- Journeys to a collection point permanently designated by the employer (e.g. fixed meeting point, specific car park, bus or train depot, ferry port),
- Journeys to a large-scale work area (e.g. forest area, port area, but not factory premises) in accordance with § 9 para. 1 no. 4a sentence 3 EStG.
(§ 3 no. 15 EStG 2019, introduced by the "Act to Avoid VAT Losses in the Trade of Goods on the Internet and to Amend Other Tax Regulations" of 11 December 2018).
Which means of transport are subsidised?
- Employer benefits for employee journeys with public transport in scheduled services (1st alternative) are subsidised. This applies to employees in active employment and temporary workers at the hirer. Private journeys are not subsidised. This includes trains such as ICE, IC, EC of Deutsche Bahn, long-distance buses on fixed routes with stops and comparable high-speed trains.
- Employer benefits for these journeys as well as private journeys in local public transport (2nd alternative) are also subsidised and apply to all employees and temporary workers. This applies regardless of the type of journey, including private journeys. Local public transport includes the general transport of persons in urban, suburban or regional transport. This includes public transport that is not part of long-distance passenger transport. In some cases, taxis may also be included if they meet certain conditions.
Note: A taxi is not considered a subsidised public transport (BFH ruling of 9 June 2022, VI R 26/20).
Travel allowances for journeys with your own car are taxable from 2019, but can be taxed at a flat rate of 15% by the employer. The amount taxed at a flat rate is exempt from social security contributions (§ 40 para. 2 sentence 2 EStG). The travel allowance taxed at a flat rate does not increase the gross salary shown in the payslip. Only if the travel allowance is not taxed at a flat rate will it be added to the gross salary and taxed normally.
The flat rate taxation is only permissible if the allowance is paid in addition to the salary already owed and not if salary is converted into a travel allowance. However, it is often possible to pay travel allowances instead of a salary increase.
The following means of transport are not subsidised:
- Buses or trains specially rented or chartered for specific occasions,
- Taxis in occasional transport that do not operate on licensed lines or routes,
- Air transport.
Which employer benefits are subsidised?
The tax exemption includes
- Employer benefits in the form of free or discounted travel permits (benefits in kind, job ticket),
- Employer subsidies (cash wages) for travel permits purchased by employees themselves.
Subsidised are in particular travel permits in the form of single/multiple journey tickets, season tickets (e.g. monthly, annual tickets, Bahncard 100), general free travel permits, free travel permits for certain days (e.g. in case of smog alert) or discount cards (e.g. Bahncard 25).
From 1 May 2023, the Deutschlandticket, often known as the 49-Euro-Ticket, will be available. With this ticket, citizens can use local public transport throughout Germany. Employers can offer this ticket as a job ticket. If the employer provides at least 25 percent of the ticket price as a subsidy, the transport company grants an additional five percent discount.
These employer subsidies for the Deutschlandticket are tax-free as long as they are in addition to the salary already owed. This means that employers can grant their employees tax-free subsidies for the use of the Deutschlandticket, provided this bonus is in addition to the normal salary.
The tax-free subsidies must be recorded in the payroll account and shown in the payslip. Employees can offset these tax-free subsidies against their deductible travel expenses, which means that the travel allowance is reduced accordingly.
Price advantages from third-party companies and group companies (subsidies and benefits in kind) that are granted in consideration of the employment relationship and would be treated as wages are also tax-free (according to BMF letter of 20 January 2015, BStBl. 2015 I p. 143).
Price advantages granted to employees by third parties are part of taxable wages if they represent a benefit of the employee's work for the employer and are related to the employment relationship, or if the employer has actively participated in obtaining these price advantages.
Such price advantages are tax and social security free if the third-party company has a predominantly self-economic interest in granting the discount, the third-party company usually grants the price advantage to third parties in the normal course of business, e.g. quantity discounts, or the granting of the advantage is in the overwhelming interest of the employer.
The monetary value of a job ticket is no longer offset against the 50 Euro exemption limit for benefits in kind. This benefit can now be used elsewhere (§ 8 para. 2 sentence 11 EStG). For employees of transport companies, the tax-free free travel entitlement is no longer offset against the employee discount allowance of 1,080 Euro (§ 8 para. 3 EStG).
If you receive a subsidy from your employer for journeys to work with your own car, the previous regulation remains in place, i.e. the subsidy can be taxed at a flat rate of 15% by the employer (§ 40 para. 2 sentence 2 EStG).
Since 1 January 2019, employers have an option for job tickets and subsidies that are not tax-free under § 3 no. 15 EStG. They can choose a flat rate tax of 25 percent without reducing the travel allowance. The decision as to whether the 25 percent flat rate tax or the 15 percent tax is more advantageous depends on your individual situation.
The travel allowance only applies if it exceeds the employee allowance of 1,230 Euro per year, provided no additional business expenses are incurred. For shorter distances, the 15 percent flat rate tax may therefore be more sensible, as in such cases the reduction of the travel allowance is less significant.
Do I also get the travel allowance if I use a company car?
You can also claim the travel allowance if you use a company car for the journey to work. Please note:
- You must tax a surcharge on the private use value for journeys between home and work.
- The travel allowance is 0.30 Euro per kilometre (from the 21st kilometre 0.38 Euro) and is deductible as business expenses.
- If your employer taxes the use value at a flat rate of 15 percent, deduct this amount from your business expenses.
