- 1 In a nutshell: deduct office furniture as operating expense
- 2 How is office furniture depreciated?
- 3 A closing tip
Deduct one’s office chair: in todays article we want to show you how to offset your newly purchased office furniture against tax as well as your new office chair.
Yes, it’s true – office furniture and equipment are quite expensive. But investing will be worth it due to the fact that freelancer and tradespeople must not pay them themselves but can rather offset the charges against tax. Employees who are in need of a place to work at home and need to provide it themselves can also claim income-related expenses as tax exempt.
In a nutshell: deduct office furniture as operating expense
In the following section, we will explain what to pay attention to in order to get the most out of your great and ergonomic new office furniture from a tax point of view as well:
So, who and what is allowed to deduct?
- Self-employed persons, i.e., freelancers and tradespeople, may deduct their business expenses from tax.
- According to § 4 para. 4 of the German Income Tax Act (short: EStG), business expenses are expenses that are caused by the business.
- Employees may deduct office furniture as income-related expenses according to § 9 para. 1 of the EStG: expenses for acquiring, securing, and maintaining income.
To which amount may office furniture be deducted?
- Self-employed persons, freelancers and tradespeople may write off office furniture worth up to €800 as inferior goods (German abbreviation: GWG) immediately or by pooling it over five years.
- Anything more than € 800 must be depreciated for 13 years.
- For employees, this means that office furniture can be written off in full in the year of purchase if it is an inferior good (GWG), i.e., the single piece of furniture should not exceed.
You can therefore claim the purchase of office furniture for tax purposes if you use it professionally or commercially.
How is office furniture depreciated?
Self-employed persons, freelancers, and tradespeople
In 2018, the threshold for inferior goods (GWG) was increased from € 410 to € 800. Since then, office furniture that did not cost more than € 800, excluding VAT, can be immediately deducted from tax in full (Section 6 (2) of EStG).
If you, as an entrepreneur, purchase a larger number of office furniture items, you can even use them for tax structuring and postpone the expenditure to years in which you expect a higher profit.
According to § 6 para. 2a of EStG, the so-called pooling solution is also open to you. According to this, you may place assets whose acquisition and production costs (excluding VAT) vary between € 250 and € 1,000 in a pooled item and depreciate them over 5 years.
If you buy 20 high-quality office chairs worth € 800 for yourself and your employees, you can deduct € 16,000 from tax in the year of purchase or alternatively € 3,200 in each of the next five years.
On the other hand, office furniture whose acquisition and production costs without VAT exceed € 1,000 must be depreciated in accordance with the tax depreciation scale. The current depreciation range (as of 2019) is 13 years.
According to Section 9 (1) of EStG, employees can deduct expenses for acquiring, securing, and maintaining income as income-related expenses. Apart from travel expenses to the workplace, they also include expenses for technical literature, for further education or for an office at home and its furnishings.
There are often disputes about workrooms at home, as the tax authorities make recognition dependent on a whole range of factors.
One factor, for example, is that no other workplace is available to the person concerned. The tax authorities regularly assume this in the case of teachers or dependent field service employees.
If, on the other hand, your employer provides you with an office and you only regularly take work into your own four walls, then the tax authorities generally do not approve a home office. However, work equipment is not affected by this regulation.
You can still claim office furniture and technical equipment for tax purposes. The only condition is that you use them almost only for professional purposes.
The criterion of professional use is also fulfilled if the office equipment is for educational purposes. For example, if you are writing your doctoral thesis or learning a language that you need for your job. However, special rules apply to students, which we will explain in the next section.
Private use of the office furniture, for example for surfing the Internet or playing computer games, must be avoided or be insignificant. In this case, it does not matter where the office furniture is located.
If you buy an office chair and sit at the kitchen table when working from home, you can still claim the expenses for the chair as income-related expenses.
The situation is different with the desk, however, since you will probably also use it to eat or prepare food. Private use is then no longer insignificant.
Employees are also only allowed to deduct office furniture in full in the year of purchase if it is considered to be an inferior good (GWG).
This means that the individual piece of furniture may not cost more than € 800. Otherwise, the costs must be claimed over 13 years. The pooling solution is only available for entrepreneurs.
Deduct office furniture as extraordinary expenses or as exceptional costs
Expenses for your first vocational training can unfortunately not be declared and deducted as income-related expenses, as long as it is not a classic apprenticeship where you alternately learn and work.
However, if you have a sideline and taxable income, you still have a “tax loophole”.
Because expenses for one’s own vocational training are considered so-called extraordinary expenses according to § 9 paragraph 6 and § 10 paragraph 1 No. 7 of EStG, which are deductible up to a maximum of € 6,000 for single persons and € 12,000 for married couples.
So, in case you buy a high-quality desk and office chair to study for your exams at home, you can declare the expenses as extraordinary expenses up to the amount mentioned above.
In some cases, you can even deduct a good office chair from your taxes if you use it mainly or even exclusively for private purposes. However, there have to be medical reasons for this. For example, following an operation or an accident. However, it can also be sufficient that a particularly good office chair is indicated as a prophylactic measure, for example after a diagnosed slipped disc.
In this case, expenses can be claimed as exceptional costs. However, this only applies if the so-called reasonableness threshold is exceeded. The threshold values are regulated in Section 33 in EStG as follows:
For any singles without children, the threshold of reasonableness is 5 per cent of the total income with an income of up to € 15,340. In this case, a tax deduction is only possible if the exceptional costs exceed the amount of € 767 per year.
However, if you have other health-related expenses, such as taking expensive medication or paying for curative treatments, you may add the expenses for a new desk chair to these costs. The limit of what is appropriate can then be quickly exceeded for people with lower incomes.
A closing tip
While self-employed persons have to observe the accounting regulations that apply to them anyway and keep invoices for ten years, there are no comparable regulations for dependent employees. However, take a look at the small print of your tax assessment. If it states that the tax assessment was issued with reservations, the German tax authority can cancel it and check your tax return again even if there are no special reasons.
They will then usually ask for receipts. It is therefore better to keep the invoice for your new office furniture until the tax for the concerned period has been finally assessed.