Ruling in court unveils expansion of income for employment and taxation matters
A significant decision made by the Lower Saxony Finance Court on June 18, 2024, is shedding light on the ongoing challenge of tax notices from the tax office, particularly for temporary workers. The case, with case number 12-K-38/24, is making waves in the industry as it highlights the importance of including kilometres travelled to the workplace in tax returns, not just the flat-rate distance allowance.
At the heart of this case is a temporary worker who was employed on a fixed-term basis for several years, working at a client's plant. The employment relationship was initially fixed-term and was extended several times upon expiration. The unique aspect of this case lies in the worker's mobility, as the employment contract stated that they could be deployed at various locations throughout Germany and could be lent to other companies for work.
The personnel agency reserved the right to make transfers and relocations for operational reasons, leading to substantial travel expenses for the worker. In a precedent-setting decision, the Lower Saxony Finance Court ruled that the worker was entitled to an increased allowance of 13,110 euros for advertising expenses, originally 6,210 euros.
This decision serves as a precedent for future cases involving temporary workers and advertising expenses. It also reinforces a ruling made by the Federal Fiscal Court (Bundesfinanzhof) in 2022, which rejected the tax authority's demand for a fixed-value travel allowance instead of actual travel expenses for temporarily employed individuals.
In light of these rulings, temporary workers are advised to cite the decision of the Lower Saxony Finance Court when filing their tax returns. This case underscores the importance of accurate record-keeping and thorough documentation for temporary workers, ensuring they receive the correct tax allowances for their expenses.
This case is a reminder that the tax landscape can be complex, particularly for temporary workers who may face unique challenges in their employment. However, with a keen understanding of their rights and a diligent approach to record-keeping, temporary workers can navigate this landscape with confidence.
