Deductions and allowances
When determining the basis of charge for the income tax, the taxable income, certain expenses of the taxpayer in excess of operating expenses and work-related expenses may be deducted in a restricted manner.
Such so-called special expenses (Sonderausgaben) are, for example:
- Provident expenses = insurance premiums with provision character
- Expenses for one's own professional training
- School fees
- Expenses for additional retirement savings
- Maintenance payments to divorced spouse
- Donations
In addition, certain expenses may be deducted as so-called extraordinary financial burdens
(außergewoehnliche Belastungen):
- Own expenses which the taxpayer inevitably incurs; e.g. own costs for illness if they exceed a certain percentage of the income
- Expenses of taxpayer for maintenance and professional training of another person to a limited extent, e.g.
-
- Expenses for the professional training of an adult child not living at home
- Expenses for household help as a result of age or health reasons,
- Expenses for placement in a home,
- Expenses for personal care of a helpless relative;
- Flat rate for disabled persons
For each child of the taxpayer to be taken into consideration, a
- tax-free child allowance as well as
- an allowance for care, educational or professional training requirements of the child
may be deducted from the income, if deduction of the allowances is more favourable than the entitlement to child benefit, quod vide Family assistance.
The collective income tax is reduced directly through certain tax reliefs, these include in particular
- Tax relief for foreign income (credit for foreign taxes)
- Reduction of tax for expenditure on employment or services in or around the household
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