Tax Deductions for Freelancers in Germany: Complete Guide

As a freelancer in Germany, understanding which expenses are tax-deductible can significantly reduce your tax burden. This comprehensive guide covers all the expenses you can deduct and how to properly document them.

Understanding Business Expenses (Betriebsausgaben)

Business expenses are costs that are directly related to your freelance work. These expenses reduce your taxable income, which means you pay less tax. The key principle: If an expense is necessary for your business, it’s likely deductible.

Office and Workspace Expenses

Home Office Deduction

If you work from home, you can deduct a portion of your rent and utilities:

Option 1: Simplified Method (Pauschale)

• 1,250 EUR per year (1,000 EUR for rent + 250 EUR for utilities)
• No need to calculate exact square footage
• Available if you don’t have a separate office space elsewhere

Option 2: Actual Costs Method

• Calculate the percentage of your home used for business
• Deduct that percentage of rent, utilities, insurance, and maintenance
• Requires detailed documentation and floor plan
• More beneficial if your home office is a significant portion of your living space

Requirements:

• The space must be used exclusively or primarily for business
• It should be a separate room or clearly defined workspace
• Keep records of square footage and usage

Office Rent

If you rent a separate office space:

• Full rent is deductible
• Utilities, insurance, and maintenance costs
• Cleaning services
• Security systems

Office Equipment and Furniture

All office equipment is deductible:

• Desks, chairs, filing cabinets
• Computers, monitors, printers
• Software licenses (one-time and subscriptions)
• Office supplies (paper, pens, etc.)

Depreciation:

• Items over 800 EUR: depreciate over several years
• Items under 800 EUR: full deduction in the year of purchase
• Computers and software: typically 3-5 years depreciation

Technology and Software

Hardware

• Computers, laptops, tablets
• Monitors, keyboards, mice
• Printers, scanners
• Smartphones (if used primarily for business)
• Servers and networking equipment

Software and Subscriptions

• Accounting software (like Solobooks)
• Design software (Adobe Creative Suite, etc.)
• Project management tools
• Cloud storage services
• Website hosting and domain fees
• Email services
• VPN services for business use

Internet and Phone

• Business portion of internet costs
• Business phone line or mobile plan
• If you use personal phone/internet for business, deduct the business percentage

Professional Development and Education

Training and Courses

• Professional development courses
• Online courses related to your field
• Certifications and licenses
• Conference and workshop fees
• Educational books and materials

Professional Memberships

• Industry association fees
• Professional organization memberships
• Trade publication subscriptions

Marketing and Advertising

All marketing expenses are deductible:

• Website design and development
• SEO and online advertising
• Social media advertising
• Business cards and printed materials
• Photography for your portfolio
• Branding and logo design
• Email marketing tools

Travel and Transportation

Business Travel

• Train, plane, and bus tickets for business trips
• Hotel accommodations
• Meals during business travel (80% deductible)
• Taxi and rental car costs
• Parking fees

Local Transportation

• Public transportation for business meetings
• Car expenses (if used for business)
  • Option 1: 0.30 EUR per kilometer (simplified)
  • Option 2: Actual costs (fuel, maintenance, insurance, depreciation)
• Parking fees for business meetings

Important: Commuting from home to your regular office is NOT deductible. Only travel between business locations or to client meetings counts.

Meals and Entertainment

Business Meals

• Meals with clients or business partners
• Only 70% of the cost is deductible
• Keep receipts and note the business purpose
• Document who you met with and why

Client Entertainment

• Similar rules apply
• Must be directly related to business
• 70% deduction limit

Professional Services

You can deduct fees for:

• Tax advisors (Steuerberater)
• Lawyers (for business matters)
• Accountants
• Business consultants
• Coaches and mentors
• Translators and interpreters

Insurance

Business-related insurance premiums:

• Professional liability insurance (Berufshaftpflichtversicherung)
• Business equipment insurance
• Legal expenses insurance (for business matters)
• Health insurance (if self-employed and not covered elsewhere)

Bank and Financial Services

• Business bank account fees
• Credit card processing fees
• Payment service fees (PayPal, Stripe, etc.)
• Loan interest (for business loans)
• Accounting software subscriptions

Other Deductible Expenses

Subscriptions and Publications

• Industry magazines and journals
• Online news subscriptions (business-related)
• Research databases

Gifts and Client Relations

• Small business gifts (up to 35 EUR per person per year)
• Client appreciation events
• Holiday cards and promotional items

Charitable Donations

• Donations to recognized charities
• Must have proper receipts
• Can reduce income tax significantly

Expenses You Cannot Deduct

• Personal expenses (clothing, personal meals, etc.)
• Commuting to your regular office
• Fines and penalties
• Personal portion of mixed expenses
• Expenses without receipts or documentation

Documentation Requirements

To claim deductions, you must:

1. Keep all receipts
   • Store digitally or physically
   • Organize by category
   • Keep for 10 years (German requirement)
2. Document business purpose
   • Note why each expense was necessary
   • For meals: who you met and the business reason
3. Separate personal and business
   • Use separate bank accounts
   • Never mix personal and business expenses
4. Use accounting software
   • Tools like Solobooks help track and categorize expenses
   • Automatic receipt scanning and organization
   • Export reports for tax filing

Tips for Maximizing Deductions

Start tracking from day one

• Don’t wait until tax season
• Use accounting software from the beginning
• Take photos of receipts immediately

Understand the rules

• Some expenses have limits (meals at 70%, gifts at 35 EUR)
• Know what’s fully deductible vs. partially deductible

Keep detailed records

• The more documentation you have, the better
• If audited, you’ll need to prove every deduction

Consult a tax advisor

• Especially in your first year
• They can identify deductions you might miss
• Worth the cost for peace of mind

Common Mistakes to Avoid

Not keeping receipts

• Digital receipts count, but you must be able to produce them
• Organize receipts by category and date

Mixing personal and business

• Always use separate accounts
• If you use something for both, only deduct the business portion

Claiming personal expenses

• Clothing, personal meals, and entertainment are generally not deductible
• Be honest about what’s truly business-related

Missing deadlines

• Keep receipts organized throughout the year
• Don’t wait until tax season to organize

How Solobooks Helps

Solobooks makes tracking deductions easy:

• Automatic expense categorization
• Receipt scanning and storage
• Export reports for your tax advisor
• Reminders for important deadlines
• Integration with your bank account

Need Help?

If you have questions about tax deductions:

• Email us at support@solobooks.de
• Chat with us in the app
• Visit our Help Center for more guides

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Last updated: July 1, 2025