Tax deduction for relocation! This is how it works:

Deduct the move from your private tax bill

The situation is a little different in the case of a private move, because in this case we are not talking about relocation costs as income-related expenses, but rather about household-related services. You can also write these off this way. Also define whether you are relocating because it is necessary for specific reasons. If so, this is a so-called extraordinary expense. You can also record this type of move as a private move that you can deduct from your taxes. It is therefore also possible to transfer household-related services so that you can deduct your removal costs. You will therefore be pleased to know that you are able to deduct your transfer for tax purposes for both professional and private reasons. You can therefore highlight the reason for the transfer in your upcoming tax return. Don’t forget that you will need supporting documents and evidence, which may need to be submitted. It is therefore even more important for you to have the following:

• Invoices
• Quotations
• Documents

It’s a little more difficult if you don’t have this information. Nevertheless, in this case you can still help yourself with a lump sum for relocation costs in 2021. This lump sum is deducted directly from tax rather than from personal benefits. Find out about the current year, as this lump sum for relocation costs increases annually. In addition, the amount of the deduction varies from country to country. Your financial advisor or tax advisor can give you all the necessary details.

What types of moving expenses can I deduct?

In principle, you can only deduct a part of the removal costs from the required tax. It is therefore interesting to know which costs you declare in your annual tax return. You can take a look at the summary below:

• Costs for renovation measures
• Costs for furniture assembly or disassembly
• Costs incurred by removal companies and the removal service
• Rent costs, if possibly a double rent payment is required
• Overnight stay costs are incurred when looking for accommodation, but days are limited to a maximum
• Costs for the real estate agent
• Travel and transport costs

If you have a detailed list of these costs, you can claim these relocation costs for tax purposes on your tax return. You will be surprised at the amount you can add up. If in doubt, it is always advisable to ask your tax advisor so that you can declare the correct amount.

Moving for professional reasons and deducting moving costs

If you are relocating for professional reasons your situation is a little different and you can write off and claim the relocation costs incurred accordingly. The process is not complicated. You generally have to meet the following conditions:

• You must relocate because of your current or future employment
• You can provide proof of all receipts, documents and invoices
• Your work requires you to relocate to another city or within Germany, or an international relocation is necessary
• The relocation significantly reduces your travel to and from work
• You return to Germany for a new job after living abroad

As far as the documents and receipts required to deduct relocation costs for tax purposes are concerned, you should provide the following:

• Documents on the double rent due for the move
• Costs for the estate agent or viewings, or accommodation costs – these should be limited to a few days only
• Costs for the removal company or transport costs

As a general rule, you should always ensure that you keep and file all invoices and avoid cash payments wherever possible. If you need to prove a transaction, a bank statement will help you. You can obtain information about this from the tax office beforehand. In any case, it is always advisable to consult a good tax advisor beforehand.

Tax return and Annex N

In Germany, when it comes to household-related services, it is necessary to use Annex N to your tax return. You can find out the specific situation with the so-called flat-rate allowance for removal costs from the Federal Ministry of Finance. However, you can assume that there will be regular annual increases. In any case, if you use the current values ​​as a guide, you will save money. Incidentally, if you have already had to move twice within five years, the lump sum for moving costs may also increase. The tax office requires proof if there is double housekeeping and if the employee ends the double housekeeping and moves abroad.

However, if your employer pays the costs for a removal company, these expenses cannot be claimed and deducted on your tax return. We suggest you discuss this with your employer beforehand. This will help you find out who will bear the relocation costs. Your employer can also claim these relocation costs for tax purposes. The employer can reimburse these costs free of social security contributions and payroll tax. From a company and a business point of view, these are operating expenses.