The Federal Fiscal Court (BFH) has ruled in a recent judgment that anyone who moves to a larger apartment in order to set up a home office cannot deduct the moving expenses for tax purposes (judgment of 5 February 2025 – Case No. VI R 3/23).
During the COVID-19 pandemic, a married couple worked predominantly from home. They mainly worked in their living/dining room and took turns using the dining table as a desk. In 2020, the family moved to a larger apartment with two home offices. In their 2020 income tax return, the plaintiffs claimed, inter alia, the moving expenses as income-related expenses in connection with their income from employment.
The BFH has now ruled that the moving expenses in this case are not tax-deductible.
In principle, expenses incurred in connection with a move may also be recognised as income-related expenses. However, private and professional reasons must be distinguished in this context. According to the BFH’s settled case law, for expenses to qualify as income-related expenses, there must be a causal connection between the expenses and taxable income. Occupying a home falls within the sphere of private life, which is why the costs of moving home are normally regarded as non-deductible costs of private living pursuant to Section 12 No. 1 sentence 2 of the German Income Tax Act (EStG), thereby precluding the treatment of moving expenses as income-related expenses.
However, if the move is work-related, for example because it significantly reduces commuting time between the home and the place of work (according to the case law, by at least one hour), the moving expenses may be recognised as income-related expenses. It is important that private reasons are found to have played, at most, a subordinate role.
The BFH emphasises that, for reasons of legal certainty, objective circumstances must be established which, on the one hand, lie outside the individual housing situation and, on the other hand, typically indicate that the move was work-related. Only then is it possible to distinguish between moves prompted by professional reasons and moves primarily prompted by private reasons. This also applies in times when working from home is widespread.
In the case at issue, it could not be established whether the two home offices were merely the reason for or rather a consequence of the move. The desire for a separate home office is not sufficient for the moving expenses to qualify as income-related expenses, since the home office also improves the private housing situation, as it was no longer necessary to work in the living area.
The BFH thus agreed with the position taken by the tax office, after the Hamburg Fiscal Court had previously ruled that the moving expenses should be recognised as income-related expenses.
