Are the income-related expenses in Form N-AUS the same as in Form N?

If wages are tax-free in Germany due to a double taxation agreement or the Foreign Employment Decree, expenses economically related to the tax-free foreign income cannot be deducted as income-related expenses when determining the income taxable in Germany (due to Section 3c EStG). Therefore, they must not be entered in "Form N".

However, since the tax-free wages are subject to the progression clause, you may deduct your expenses "as if they were income-related expenses" from the relevant foreign income. This reduces the amount of foreign income included in the progression clause, which increases the taxable income. Enter these expenses in "Form N-AUS".

(2022): Are the income-related expenses in Form N-AUS the same as in Form N?

How should income-related expenses be entered in Form N-AUS?

If you receive both domestic and foreign income during your stay abroad, it must be determined to what extent business expenses are attributable to taxable and tax-free income. The causation principle applies:

• If the expenses are related to taxable domestic income, they are deductible as business expenses, e.g. meal allowances.
• If the expenses are related to tax-free foreign income, they can be deducted "as" business expenses from the income, and only the reduced amount must be included in the progression clause.
• If it cannot be clearly determined that the business expenses are solely caused by taxable or tax-free income, the expenses must be allocated accordingly.

The expenses must therefore be allocated to the tax-free income in the proportion that the tax-free income bears to the total income received during the period abroad. The portion to be deducted as business expenses is determined by the ratio of taxable to tax-free income. This applies, for example, to work equipment, work clothing.

(2022): How should income-related expenses be entered in Form N-AUS?