What are Special Expenses (Sonderausgaben)?

One of the most popular terms in tax law is special expenses (Sonderausgaben). Special expenses include various costs of things that you buy in private life. However, unless they are income-related expenses or operating costs, these expenses reduce the tax that you are required to pay. There is a wide perspective when it comes to issues of special expenses in tax law, which can matter look more complicated. Here is a deeper look into the topic for better understanding.

What are Special Expenses (Sonderausgaben)?

As a matter of principle, your special expenses can only be deducted from your tax if you incurred them for personal use. The only exception to the rule is marriages. In their case, it is irrelevant who paid the special expenses. These costs are required to be submitted to the tax office on the year of the payment. The special expenses are divided into two categories. The first category includes precautionary expenses (Vorsorgeaufwendungen) while the second category includes other special expenses (andere Sonderausgaben).

Pension Contributions (Vorsorgeaufwendungen)

Some of the common pension costs include provisions for old age and supplementary pensions. They also include long-term care insurance and basic insurance expenses. It may include contributions to the Riester Pension insurance. All of these expenses are deducted from tax returns at the end of the year.

Here are the deductible insurance premiums:

  • Statutory pension insurance (gesetzliche Rentenversicherung)
  • Rurup Pension
  • Professional care institution (berufsständische Versorgungseinrichtung)
  • Riester pension
  • Life insurance
  • Accident insurance
  • Liability insurance
  • Employment and disability insurance
  • Private health insurance (private Krankenversicherung)
  • Unemployment insurance
  • Statutory health insurance (gesetzliche Krankenversicherung)

Other Special Expenses (andere Sonderausgaben)

There are other special expenses that are separate from the pension expenditure that is stated above.

They include the following:

  • Spousal maintenance payments (Unterhaltsleistungen)
  • Childcare costs (Kinderbetreuungskosten)
  • Church tax (Kirchensteuer)
  • Costs of the vocational training (Berufsausbildung) or for one’s spouse
  • Charitable donations (Spenden)
  • School fees (Schulgeld)

Lump Sum (Pauschale)

The tax law provides a general lumpsum for the general expenses (Sonderausgaben). Currently, the lumpsum for singles is €36 and €72 for the married in the calendar year. This lump sum is granted to the taxpayer automatically, and the taxman takes this into account. Therefore, you do not have to make a separate application for it.

The only requirement that you should fulfil in order to benefit from the lump sum is to file for tax returns (Steuererklärung). If the expenditure in the returns exceeds the lump sum payment, the respective expenditures that are due for tax reduction should be tabulated individually and accompanied by the appropriate supporting evidence.

Subsistence payments for children and parents with low income (Unterhalt)

Documentary evidence will be required to show that the parent earns a low income. The maximum deduction that is allowed in a year is €9,168. This amount can be reduced by the standard of living in the country or the financial situation of the beneficiaries in question.

There are also deductions for children that are educated abroad or in Germany (there are limitations in this case). These children should be over 18 years of age and living out of their parents' household. They must also be incurring a household cost amounting to €924 per the calendar year.

There are special deductions that are granted on a case to case basis. One of the popular examples is deductions for the handicapped family members and expenses for employing a house help.

Childcare Costs (Kinderbetreuungskosten)

If you fulfill certain requirements, you can have the actual expenses for maintaining your child deducted from your tax returns for a maximum of €4,000per year. One of the requirements is that the child should be younger than 14 years. However, the tax law allows for older handicapped children.

Church Tax (Kirchensteuer)

One of the special expenses includes the church tax. Any payments made to this tax are deductible. The payments may include church taxes owed and paid, any church tax that is paid by the employer and the quarterly advance to the payment of the tax.

Initial Educational Expenses (Erstausbildung)

In addition to the above, any costs for initial studies are taxed up to €6,000 for each calendar year.

Here are some of the costs involved in the initial studies:

  • Course fees
  • Literature
  • Tuition fees
  • Printing costs
  • Study materials
  • Travel expenses

The general deduction is 30 % of the tuition fees in a recognised private school in Germany, EU and EEA countries. The maximum special expenses are limited to €5,000 a year per child.

Donations (Spenden)

The tax law defines donations as voluntary benefits that are offered to relief organisations and charities. These include donations to independent voters’ associations and political parties. All income tax donations are also tax-deductible.

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