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The basics: what a deduction actually does
In Germany, deductible business expenses are called Betriebsausgaben. These are costs you incur in the course of running your business, and you can subtract them from your revenue before calculating income tax.
Less taxable income means a lower tax bill. The principle is straightforward: if you spent money on something directly connected to your work, it likely counts.
The key rule is that the expense must have a clear professional purpose. If you can't explain the business connection — ideally with a receipt and a note about what it was for — the tax office (Finanzamt) may reject the deduction.
What you need to keep
Before getting into the categories, the most important habit: keep every receipt. The Finanzamt can audit your returns several years after the fact, so holding onto documents for at least five to six years is the standard recommendation.
For each expense, you should ideally have:
- A receipt or invoice showing the amount, supplier, and date
- A note on the business purpose (especially for meals and travel)
- Proof of payment where relevant
What you can deduct
Home office
The standard approach is a flat-rate deduction of €6 per day, up to a maximum of €1,260 per year (210 days). This applies even if you don't have a dedicated office room — it's the simpler option for most freelancers.
If you have a fully separate room used almost exclusively for work, you can instead claim the proportional share of actual housing costs (e.g., if your office takes up 15% of your flat's floor space, you deduct 15% of your rent and utilities). The room must genuinely be a separate, enclosed space — not a desk in the corner of a bedroom.
Equipment and technology
Computers, monitors, phones, cameras, and other devices used for work are deductible. The rule depends on the price:
- Under €800 net (excluding VAT): Deductible in full in the year of purchase. These are called geringwertige Wirtschaftsgüter (GWG) — low-value assets.
- Over €800 net: Must be depreciated over the useful life of the asset (typically 3 years for a laptop or phone, longer for other equipment).
If you use a device for both work and personal purposes, you can deduct the percentage attributable to business use.
Software and subscriptions
Accounting software, design tools, project management platforms, cloud storage, communication tools — all deductible as long as they're used for your work. Monthly or annual subscription costs are expensed in the year they occur.
Co-working space
Membership fees for a co-working space are fully deductible. Keep the invoices from your co-working provider with all required details.
Professional development
Courses, workshops, seminars, and relevant books or publications are deductible when they're directly related to your field. The Finanzamt may ask for details about the course to confirm the professional connection, so keep documentation.
Travel and transport
Business travel is deductible: train tickets, flights, accommodation, and transport costs for trips made for work. Keep a record of the purpose of each trip.
For business trips using your own car, the standard rate is €0.30 per km (2025).
Client meals and entertainment
Business meals are deductible, but only 70% of the cost. The other 30% is considered a personal benefit and is not deductible.
For a meal to be deductible, you must use the official receipt format accepted by the Finanzamt: a Bewirtungsbeleg. This shows who attended, the occasion, and the business purpose.
Professional services
Fees paid to your Steuerberater (tax advisor), a lawyer, or other professional consultants working on your behalf are fully deductible.
Health insurance
Health insurance premiums are deductible as Sonderausgaben (special expenses) — a separate category from operating expenses, but they reduce your taxable income in the same way. There are annual caps on how much can be deducted.
Client gifts
You can give one gift per client per year and deduct it — up to €50 per recipient (the limit increased from €35 in 2024). Gifts above this amount are not deductible, even partially.
Internet and phone
The portion of your internet and phone bills attributable to business use is deductible. If you use your phone for both work and personal calls, estimate a reasonable business percentage and deduct that share.
What you cannot deduct
- Clothing (unless it's a specific work uniform or protective gear)
- Personal meals not connected to a client meeting
- Fines and penalties
- Personal travel mixed with a work trip (the personal portion)
Depreciation: the longer version
For assets costing more than €800 net, Germany requires Abschreibung (depreciation). Instead of deducting the full purchase price in year one, you deduct it gradually over the asset's expected useful life.
The tax authorities publish standardised depreciation tables (AfA-Tabellen) specifying the expected lifespan for different types of assets.
Freiberufler vs. Gewerbetreibende
If you qualify as a Freiberufler (a liberal professional — such as a consultant, IT contractor, writer, teacher, or designer), you are exempt from trade tax (Gewerbesteuer). The same deduction rules apply to both categories.
The short version
Keep your receipts, note the business purpose, and claim everything with a genuine professional connection. If you're unsure whether something qualifies, it's worth asking a Steuerberater — their fees, of course, are deductible too.
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