Should an employee be posted to a subsidiary company abroad over a long period of time, this can potentially have an impact on the arrangement of his professional expenses.
GRP Rainer Lawyers and Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Stuttgart, Bremen, Nuremberg and London explain: It is not uncommon at corporate groups and firms that are active in Europe and globally, for qualified workers to be posted to subsidiaries of the company abroad.
The Düsseldorf Finance Court was recently presented with a similar case to be decided (judgment of 14 January 2013; Az.: 11 K 3180 / 11 E). In this case, the claimant was initially posted for three years to a foreign subsidiary company of a German business. In total, he was actually active for six years for the subsidiary company abroad. For this reason, the claimant then moved with his family abroad and at the same time he apparently retained his German residence. Hereafter, the claimant then claimed the rental expenditure for the residence abroad as well as the journeys between this and the foreign workplace as professional expenses.
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The Düsseldorf Finance Court has, however, dismissed an analogous action. The judges appeared to justify their view with the period of time in which the employee was posted abroad. The claimant was active for a total of six years for the subsidiary company. For this reason, the foreign workplace was not simply a temporary one, but rather it is to be considered a regular workplace.
The Court was likely of the view that the centre of the claimant’s life was his work abroad. The maintenance of a residence in Germany is therefore not to be considered an article of professional expenses. This also applies from the point of view of a maintaining a second household. Consequently, the Court did not consider the rental expenditure for the residence to be deductible.
Due to the complexity of tax law, you should obtain qualified legal counsel in advance. A lawyer versed in tax law can comprehensively examine your case and moreover advise you with respect to contentious legal issues.
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