No deduction of advertising expenses when moving to set up a home office

Moving costs are generally not considered income-related expenses, as they are non-tax-deductible costs of private living. The situation is different if the move was necessitated by professional reasons. In its ruling of February 5, 2025 (Ref. VI R 3/23), the German Federal Fiscal Court had to clarify whether expenses incurred by the taxpayer for moving to another apartment in order to set up a home office (for the first time) were work-related and thus fulfilled the requirements for deduction as income-related expenses.

Due to the measures imposed in the 2020 tax year as a result of the coronavirus pandemic, the couple had to move their respective workplaces to the living room of their shared apartment, which was an unsatisfactory living/working situation for them and therefore decided to move to another apartment. In the new apartment, they set up two rooms as separate home offices. They wanted to claim the expenses incurred for the move as income-related expenses against their income from employment, but the tax office did not recognize this. The tax court upheld the subsequent appeal. In its view, the move was work-related because it significantly improved the couple’s working conditions.

However, the German Federal Fiscal Court ruled otherwise. According to established case law, the professional connection has always been affirmed only on the basis of objective circumstances outside the individual’s living situation. If such circumstances exist, the taxpayer’s personal motives for moving to a particular apartment are no longer relevant. Otherwise, moving costs could never be deducted as income-related expenses. In the case in dispute, however, there was no objective criterion that was not at least partly caused by the private living situation. The mere desire to set up a separate study - unlike in the case of a move for specific professional reasons (e.g., change of employer, move to a company apartment, or a reduction in travel time to the place of work of at least one hour) - is not sufficient. The choice of an apartment, in particular its location, size, layout, and use, was therefore primarily based on private motives and preferences in the case in dispute and was more a matter of private lifestyle than of the professional sphere.