Expenses incurred in acquiring or maintaining taxable income are, in principle, deductible items. The maximum allowance for travel expenses to and from work is EUR 7,000 with an own-risk share of EUR 750. Generally, only travel expenses incurred though the least expensive means of transportation (public transportation: train, bus, streetcar, or ship) are deductible. Other deductions for earning income may include expenses for professional literature, own tools, and so on, against original payment receipts. Moving, automobile, and entertainment expenses are generally not deductible.
If the employer does not reimburse for increased living expenses due to business trips, a deduction from earned income may be available. The amount of deduction shall be based either on actual expenses or a fixed amount determined annually in the tax authorities’ guidelines. Also, travelling and accommodation expenses due to business trips may be deducted if not reimbursed by the employer.
A standard deduction of EUR 750 from salary income is granted if actual business expenses are below that amount.
Mandatory pension premiums are fully deductible from earned income for both national and municipal tax purposes.
The deductibility of voluntary pension contributions is limited, and they are deducted from capital income (maximum deduction of EUR 5,000).
Other savings in certain long-term investments (e.g. a long-term savings contract with a bank, investment fund company, or other investment service company) are also entitled to the same deduction as the contributions to voluntary pension insurances.
Unemployment insurance premiums
Mandatory unemployment insurance premiums are deductible from earned income for both national and municipal tax purposes.
Interest charges from certain loans are deductible from capital income. If the deductions from capital income exceed the amount of capital income, the end result is a capital income deficit of which 30% can be deducted from taxes on earned income up to certain limit (in case of home loan for a first permanent home, the aforementioned percentage is 32% during the first ten years).
Household deduction can be availed for certain care and repair work as well as installation and advising work related to telecommunications technology (e.g. installation work with personal computers, televisions, and other devices) done at the individual’s home at up to EUR 2,250 per year (EUR 100 own-risk share).
Accommodation costs of a second home needed because of two (or more) permanent workplaces can be deducted. Certain conditions must be met. The maximum deduction is EUR 450 per month.
Individuals and death estates are allowed to deduct cash donations of a minimum of EUR 850 and a maximum of EUR 500,000 from earned income if the purpose of the donation is development of science or art. The requirement for deduction is that the donation is made to a university with public financing that is located in the European Economic Area or to a related university fund. The purpose of this change is to advance private finance of universities.