For instance, the term „regelmäßige Arbeitsstätte“ (regular workplace), which has always been controversial, will be defined by law as of 2014 and replaced by the term „erste Tätigkeitsstätte“ (primary place of work), which has not been tested in practice. The employee has such a primary place of work, that he is permanently assigned to, in a firmly established place of business of the employer, a company or a third party determined by the employer (especially a customer). In the future the employer will be able to specify the location of this one particular primary place of work in a tax effective way by means of assignment. Whether the employer spends most of his work time in the primary work place is of no consequence here. It suffices if he only has a minor permanent employment there or he is merely employed there until further notice even if it is only for minor supporting work such as picking up orders or a company car. Hence, for tax purposes it is possible to specify a primary work place that is different from the place of work stipulated in the employment contract. However, if the employer does not make an assignment or it is not clear temporal as well as quantitative criteria take effect as stipulated by law: The primary place of work is then determined based on where the employee typically spends his workdays or two work days per work week or is supposed to spend at least one third of his agreed regular work time. Sales representatives for instance who have to travel around visiting different customers do therefore usually not have a primary place of work.
The absence as well as the explicit specification of a primary place of work has substantial consequences: For trips between his residence and the primary place of work the employee can merely deduct the distance travelled from his taxes but he cannot submit travel expenses. If there is no primary place of work or work related trips are made to places other than the primary place of work the actual costs or the lump sum of EUR 0.30 per kilometer are categorized as income-related expenses provided that there is neither a “gathering point” stipulated by the company nor an “extensive work area”. Additionally, if there is a sufficient time of absence additional subsistence expenses and, if applicable, costs of accommodation can be deducted or paid by the employer free of income tax.
At the end of the day it will be in the employee’s interest not to have a primary place of work or, if he does, the one that is closest in distance to his place of residence. Employers that are required to refund travel expenses to their employees in the amount that is exempt from income tax will strive to assign such a primary place of work so as to keep the travel expenses they have to refund to a minimum or at least prevent them from increasing.
In order to avoid having discussions with every single employee about the determination of their primary place of work employers ought to check if homogeneous regulations are to be introduced for certain groups of employees (such as travelling and non-travelling employees) or a discussion can be deprived of its basis by means of preparing or modifying travel expense guidelines as soon as possible.
In the course of the simplification changes were also made to the so called „Dreimonatsfrist“ (three month period). In the case of external, long-term work related activities or two separate households additional subsistence expenses are only deductible within the first three months. If there is an interruption of at least four weeks the three month period starts over. Since the reason for the interruption will be irrelevant in the future this will probably result in an increase in the number of vacation requests for periods longer than four weeks.
The new travel expense law regarding taxes seems to be another proof that a simplification of German tax law is near impossible to achieve. Things that may sound simple and plausible on paper often turn out to be an aggravation in disguise due to the interaction of several regulations as well as the expenditure of time in connection with the assignment, control and certification process.
Short summary of new tax travel expense law
The changes that have been made to the law on travel expenses, which also apply to income-related expenses, are equally applicable to business expense deductions for income from commercial activities and self-employment.
Definition of a “primary workplace”
The legal term “regular workplace,” which was never defined, has now been replaced by “primary workplace” and is expressly defined in the law. The primary workplace is a fixed facility of the employer, an affiliated company, or in exceptional cases a thirdy party specified by the employer to which the employee has been permanently assigned.
The flat rate for distance traveled has now been definitively regulated so that transportation costs for business trips (not trips between a temporary living place and a primary workplace or trips to family residences) can be determined by treating the actual costs as income-related expenses, or alternatively by using the flat rate per kilometer already in force (EUR 0.30 by car) pursuant to the Federal Travel Expenses Act.
Additional expenses for meals
The minimum amount of time on the road in order to qualify for the flat rate for additional meal expenses has been decreased, and the three-tiered scale in force until now has been replaced by a two-tiered scale of flat fees, set at EUR 12 and EUR 24. As before, the flat rate applies only to employees who have been working at a single workplace for less than three months. Any interruption in an employee’s work at a specific workplace for 4 weeks or more causes the three-month period to start over. If an employer or any third party designated by the employer pays for a meal, the flat rate will typically be reduced by 20% for a breakfast and 40% for a lunch or dinner from what it would have been for a full 24-hour period.
In cases where employees are required to maintain two places of residence, the typical cost of local rent will not be the determining factor. Instead, an upper limit of EUR 1,000 per month has been set until the employee’s actual cost of rent can be determined.
Lodging expenses during assignments outside of the primary workplace can be deducted as income-related expenses without restriction for up to 48 months. At the end of this time period (for long-term out-of-office assignments), expenses may not be treated any differently than they would be in cases of double residences – which means no more than EUR 1,000 per calendar month.
Meals payed for by employers
Regular meals costing no more than EUR 60 that an employer provides for his employees because of an out-of-office assignment are to be assessed in the future at their actual value.
Validity period of employee withholding tax exemption
For the sake of administrative simplicity, exemptions for employee withholding tax purposes cannot be allowed for any longer than a period of two calendar years from the beginning of the first calendar year when the exemption took effect.