Remember travel? A distant memory for most – dreamy days from a bygone era exploring foreign cities, sampling local cuisine and relaxing with a beer on the beach. Oh, and sometimes freelance work, too. This is an article for all you freelance business travellers out there. Wondering what travel expenses can you deduct?
As a freelancer in Germany, you’re eligible for tax deductions on travel expenses, the same as any other business. The only difference is you need to file these yourself. To make sure you’re ready to take your business on the road once the world returns to normal, we’ll break down German travel expenses for you. Achtung, fertig, los!
- 3 ways to pay expenses
- What counts as a deductible travel expense (2021)?
- Real life example – Sophie goes to Lyon
- Special cases
- Germany's 3-month rule
Read our no BS Business Starter Guide:
3 ways to pay self-employed travel expenses
1. Deduct your own self-employed travel expenses
Let’s start with the most popular. As a freelancer, you’ll usually deduct your own travel costs as business expenses. To do this, you’ll need to collect and submit all the relevant documents, including receipts. Skip ahead to what travel expenses are eligible for tax deductions if this option is for you! In Germany you need to keep receipts for 10 years.
2. Reimburse your employees’ travel expenses
Do you run a small self-employed business with one or more employees? If so, you might need to reimburse your employees’ travel expenses and deduct them as business expenses later on. As a rule, employees make advance payments and submit all their documents to you. It’s also possible to make bookings using a company card – this simplifies expense filing. With Holvi, employees can snap a photo of their receipts and attach them to expense payments in-app, on the spot. Holvi Pro comes with up to 3 cards included – you can also order more for just €3/month.
Pro tip – Holvi travels
You and your employees can use your Holvi cards abroad, with no extra charge in EU currencies. Withdraw cash from ATMs and record all travel expense receipts on the fly.
3. Invoice travel expenses to clients
The last way to handle travel expenses is to invoice your clients for all costs directly, including VAT. You can do this either after the fact or by prior arrangement if funds are low.
You can negotiate how much is acceptable. Most clients will refuse a claim for a night in a 5-star hotel, but you should charge a generous mileage allowance or accommodation costs to make sure you actually cover costs.
Of course, you’ll need to keep a clear record of all expenses and share this with your client, along with receipts.
What counts as a deductible travel expense in 2021?
Running a freelance business is tough, so you’ll no doubt want to deduct all possible business expenses from taxes. First you need to clarify what exactly counts as a deductible travel expense
Generally speaking, costs incurred in the course of a business trip, driving or changing assignments are deductible. You’ll only get compensated if you can prove there were no private excursions during your business trip.
Deductible travel expenses include:
Planes, trains and buses
Flights, train tickets and bus tickets are all deductible as business expenses. Make sure to save your receipts. To avoid any potential disputes with the tax authorities, try to always purchase tickets in advance for cheaper fares. The less attention your expense claims draw, the better off you’ll be. Just imagine you work for a really stingy employer.
If you use public transportation, you can also deduct these costs.
Driving a personal car
If you use your private car for business trips, you can deduct a kilometre flat rate from taxes. In 2021, this is €0.30/km in Germany. You can use this kilometre flat rate to and from your business trip destination.
Accommodation – Hotels, Airbnbs
Freelancers in Germany can expense the cost of hotel rooms and other types of accommodation. Strangely, the overnight flat rate for accommodation for trips within Germany is only €20 in 2021 – hardly enough to cover the cost of a youth hostel. However, trips abroad are more fairly compensated.
Friends in far flung places?
Even if you stay overnight for free (e.g., with friends) during the trip, you’re entitled to a flat rate overnight stay. See the column second from the right for overnight allowance ‘without proof’ abroad.
Business travellers get a daily allowance for extra expenses for meals during the trip. The amount of daily meal allowance is based on the length of time away, and on the nature of your trip (i.e., it must strictly be business).
Stay within the limit or pay the difference!
When travelling within Germany, you can deduct:
Between 8 and 24 hours (or day of arrival/departure)
Minimum duration of 24 hours
For travels abroad, you can usually deduct much more. This official chart breaks down daily allowances for each country in 2021.
Wherever you go, your business goes with you.
Real example – Sophie goes to Lyon, what can she expense?
Sophie runs her own restaurant La Belle Patate (i.e., she’s self-employed). There’s an annual culinary conference coming up, so she goes on a two-day trip from Berlin to Lyon, France. While she loves her work – and all things food related – this is a business trip.
After work on Friday, she catches a bus to Hauptbahnhof and hops on a direct train to Lyon, where she checks into her Airbnb. The fair runs from 7:00–19:00 on Saturday, so she stays overnight the first night, gets up early, attends the fair – sampling lots of scrumptious food! – and stays for some networking drinks after the event. She knows the German tax authorities might reject her claim for another night in Lyon, so she takes a late train back to Berlin on Saturday night.
How does self-employed Sophie deduct travel expenses?
Since Sophie starts the trip for professional reasons and works outside her normal place of work, this is 100% a business trip. For tax purposes, she can claim travel, accommodation, meals and ancillary travel costs.
- Travel costs: bus and train tickets (for both arrival and departure as well as for the journey to the food fair) in full as operating expenses
- Accommodation costs: According to this list, Sophie can expense up to €115 for overnight Airbnb accommodation in Lyon, provided she keeps her receipts
- Food costs: Sophie gets a flat rate meal allowance. According to this list, she gets €35.20 on Friday (< 8 hours) and €44.00 euros on Saturday (> 8 hours)
- Additional travel costs: Sophie can expense admission to the fair in full as an operating expense
Unfortunately, Sophie probably can’t expense drinks for networking. Sorry Soph!
Travelling with a partner
If you take your partner with you on a business trip, you can’t deduct their travel expenses. For example, if you book a double room, you can only claim the cost of a single room in the same hotel.
Business and pleasure
We all need a break sometimes, and spending an extra day in a foreign city can do wonders for our health. Just take any personal days into account when filing for deductions in travel expenses. You’ll need to deduct personal expenses proportionally. No business expensable spa days in Iceland – unless you’re discussing business in the sauna with a client, in which case lucky you!
As soon as a trip extends over multiple days through different countries with various means of transport, there’s a risk of chaos in travel expenses. You can calm this chaos with professional travel expense software.
The 3-month rule
The 3-month rule applies to business trips abroad that last longer than three months. On these trips, you can only collect meal allowance for the first three months.
The 3-month period restarts if you come to your normal workplace for at least four weeks at a time. Work on mobile, non-stationary facilities such as ships, vehicles or aircraft are exempt from this rule.
Want to learn more about freelancing as an expat in Germany?
We hope this article clarifies how to handle self-employed travel expenses in Germany. If you want to explore more expat questions, check out: