Deduct work clothes from taxes

When is work clothing recognized by the tax office as typical professional attire and therefore tax-deductible? The distinction isn't always straightforward. Here are some tips from an expert.

Neat and uniform workwear, ideally labeled with the employee's name – as is so often the case in life, first impressions count at client meetings. Tradespeople and other professional groups – whether self-employed or employed – can claim the costs of work trousers, work jackets, overalls, or safety shoes on their tax return under certain conditions.

Employees whose employers don't provide a clothing allowance can claim the expenses as business expenses; self-employed individuals and freelancers can claim them as operating expenses. However, not all trousers, tops, and shoes are recognized as work clothing by the tax office. "The lines are often not easy to draw here," says [name/title of person speaking]. Ronald Maul, President of the Saarland Chamber of Tax ConsultantsThese are often decisions made on a case-by-case basis.

What is considered typical work attire?

"Typical work clothing is basically clothing that, by its very nature, is objectively intended almost exclusively for professional use and is necessary due to the nature of the profession," explains Ronald Maul. This is the case, for example, with police uniforms, high-visibility vests, helmets, safety shoes, or white doctor's coats. 

The mere fact that certain clothing must be worn due to an official directive does not automatically make it typical work attire, according to the tax advisor from Wadgassen. Only when something is recognized as typical work attire is it considered a work tool. In such cases, the expenses can be claimed as business expenses. Advertising expenses be asserted. 

Difficult demarcation issues

"In order for expenses, i.e. costs, for work clothing to be tax deductible, the Private use is virtually impossible “It is,” emphasizes tax consultant Ronald Maul. “In many cases, courts have had to deal with questions of demarcation.” The boundaries are drawn narrowly here.

Examples: 

Business attire such as Suit and tie are not recognized as work clothes. For example, the costs of a traditional costume The business expenses of the manager of a Bavarian-style restaurant in Nuremberg were not allowed as advertising expenses, even though the manager was required to wear the suit.

Advertising expenses for the black suit of a waiter, a clergyman or a funeral directorThey have also been rejected in the past for a A funeral speaker or a croupier.

➡️ More on the 2022 ruling of the Federal Fiscal Court read here

While a A doctor's coat or a lab coat to be recognized as work clothing white shirts, trousers and shoes not considered as professional clothing for a doctor or a masseur.

The distinctions are not always easy for those affected to understand.

Provision of clothing by employers 

Employees who receive typical work clothing free of charge or at a reduced price from their employer do not have to pay taxes on it. If employees receive work clothing in addition to their salary, the tax authorities assume that it is typical work clothing, unless the contrary is obvious.

The free or discounted provision of civilian clothing or dress, on the other hand, generally results in taxable income. This applies even if the clothing is... Company Logo is provided. 

➡️ Mixed use: While in other cases of mixed use a work-related portion of the costs is tax-deductible, for example, for trips undertaken for both private and business purposes, this is not the case for clothing used for both purposes. "According to the tax authorities, its purchase is considered a non-deductible personal expense," emphasizes Ronald Maul. 

What other expenses can be deducted as advertising costs?

✔️ If typical work clothing is involved, cleaning costs, including those for cleaning in one's own washing machine, can be claimed as a tax deduction.

✔️ If employers provide a laundry allowance for cleaning work-related clothing provided to employees, this is tax-free. However, this differs from a laundry allowance for work clothes that employees purchase themselves, as this is subject to income tax and social security contributions.

✔️ If personal luggage, including private clothing, is stolen during a business trip, even though all reasonable security precautions were taken to protect the luggage, the loss can be claimed as a business expense if no compensation is provided by insurance. However, only the pro-rata current value of the clothing is deductible, not the original purchase price.

Conclusion

"Distinguishing between normal clothing and typical work attire is not always easy. Experts must therefore be familiar with the relevant case law and be able to apply it to the specific situation," he emphasizes. Ronald Maul.

Source: Saarland Chamber of Tax Consultants

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