Deducting accommodation costs for tax: what companies and the self-employed should know

Are accommodation costs on assignments tax-deductible?

Yes, in most cases. If the assignment is work-related and the fitter works away from his erste Tätigkeitsstätte (first place of work), the actual accommodation costs are deductible as income-related expenses or business expenses (§ 9 (1) sentence 3 no. 5a EStG — the German Income Tax Act). Companies can also reimburse their employees' costs tax-free (§ 3 no. 16 EStG).

An important note first: this article conveys general information on the tax framework — it is not tax advice and cannot replace it. How your specific case is to be treated depends on details that only a tax adviser or an income tax assistance association can assess bindingly. The basic principles can be set out clearly, though — and anyone who knows them asks the right questions and collects the right receipts from the outset.

The basic principle: work-related Auswärtstätigkeit

The tax lever for assignments is called Auswärtstätigkeit (working away from the regular place of work): anyone working for professional reasons away from their home and their first place of work can claim the additional costs this causes. For employees these are income-related expenses; for the self-employed and companies, business expenses.

These additional costs expressly include necessary accommodation costs. § 9 (1) sentence 3 no. 5a EStG covers "necessary additional expenses of an employee for work-related overnight stays at a place of work that is not the first place of work". The classic fitter on changing sites typically meets this condition: the site is generally not a first place of work, and the overnight stay at the place of work is work-related.

What is deductible is the actual, documented cost of the accommodation — with worker accommodation, therefore, the invoiced amount for the room or apartment. There is initially no cap on the amount for a domestic Auswärtstätigkeit; a limit only bites on very long assignments in the same place (see below). Which factors determine the level of accommodation costs in the first place is set out in our overview of the price factors for worker accommodation.

First place of work: the decisive distinction

Whether an Auswärtstätigkeit exists is decided by the erste Tätigkeitsstätte — the employee's tax anchor. Under § 9 (4) EStG, this is the fixed business establishment to which the employee is permanently assigned. Only someone working away from this place is working away.

The assignment is made primarily by the employer through an employment-law designation, in the employment contract for instance. Where there is no clear designation, the first place of work is the business establishment at which the employee is typically to work every working day, or for at least two full working days per week. For many fitters that means: the company's registered office may be the first place of work if they regularly work there — the changing sites generally are not.

This distinction has noticeable consequences. Working at the first place of work brings no accommodation costs and no subsistence allowances, only the commuting allowance for the journey to work. With an Auswärtstätigkeit, by contrast, accommodation costs, travel costs under travel expense principles and subsistence allowances can be claimed. Particularly for fitters with mixed working patterns — sometimes workshop, sometimes site — the assignment should be documented cleanly and, in case of doubt, clarified with the tax adviser.

Receipts and invoices: no paper, no deduction

The deduction of actual accommodation costs stands or falls with the invoice. Anyone wanting to claim costs needs a receipt showing the service, the period, the amount and the provider. For company bookings there is an additional point: the invoice should be in the company's name.

The company invoice has two functions. First, it documents the business purpose for the business expense deduction. Second, a proper invoice with VAT shown separately is a prerequisite for the input VAT deduction — for short-term accommodation of up to six months, the reduced rate of 7 per cent applies (§ 12 (2) no. 11 UStG), provided the landlord is liable for VAT. A business booking with an entitlement to deduct input VAT should therefore establish at the time of booking that a proper invoice will be issued to the company.

In practice that means: avoid cash payments without a receipt, request invoices with the full company address, keep booking confirmations and proof of payment, and document the professional occasion — via the project order or the assignment schedule, for example. It is also sensible to organise the receipts by assignment and employee: in a tax audit it must be possible to trace which fitter stayed where and when, and which contract lay behind it. Maintaining this as you go, rather than reconstructing it at year end, saves discussions with the tax office. For bookings through our platform, companies can state that invoicing should be to the company directly in the enquiry.

Tax-free reimbursement by the employer

If the fitter initially bears the accommodation costs himself, the employer can reimburse them tax-free. § 3 no. 16 EStG exempts payments reimbursing travel expenses, to the extent they do not exceed the expenses deductible as income-related expenses. For actual, documented accommodation costs that means: reimbursement in full, free of wage tax and social security contributions.

A special rule applies to reimbursement without individual proof: for overnight stays within Germany, the employer may reimburse a flat 20 euros per night tax-free (R 9.7 of the wage tax guidelines) — but not where the accommodation was already provided free of charge by the employer or at the employer's instigation. The distinction matters: this 20-euro flat rate applies only to employer reimbursement. In their own tax return, by contrast, the employee can claim accommodation costs as income-related expenses only at their actual, documented level — no flat-rate deduction without a receipt is provided for there.

Where the employer reimburses the costs tax-free, the employee's income-related expense deduction is excluded to that extent — you cannot have it twice. For companies, booking and paying for the accommodation directly is usually the simplest route: the costs are a business expense, no wage is paid, and the administrative effort of settling up falls away. How companies organise accommodation for whole teams efficiently is set out on our page for companies.

Subsistence costs: the flat rates in brief

Alongside accommodation, an Auswärtstätigkeit also gives rise to additional subsistence costs — for which there are statutory flat rates. Under § 9 (4a) EStG these amount in 2026, within Germany, to 28 euros for each full day of absence of 24 hours, plus 14 euros for arrival and departure days and for days with more than eight hours' absence.

These rates have been unchanged since 2021. An increase to 16 and 32 euros planned in the meantime was not implemented — the law still states 14 and 28 euros. Note the three-month rule: for a longer-term activity at the same place of work, the deduction of subsistence allowances is limited to the first three months (§ 9 (4a) EStG). An interruption of at least four weeks starts the period afresh.

The three-month rule does not apply to accommodation costs — they remain deductible after three months at the same place of work. A different, much longer limit applies here: under § 9 (1) sentence 3 no. 5a EStG, accommodation costs for a longer-term Auswärtstätigkeit at the same place of work can, after 48 months, only be claimed up to 1,000 euros per month — so only on uninterrupted assignments of over four years in the same place.

Distinguishing doppelte Haushaltsführung

Auswärtstätigkeit is to be distinguished from doppelte Haushaltsführung (maintaining a second household for work reasons) — which applies where the employee maintains second accommodation at the place of employment and also has his own household at the centre of his life. That is typical for permanent work at a fixed location away from home, not for changing site assignments.

With doppelte Haushaltsführung, domestic accommodation costs are capped at 1,000 euros per month from the outset (§ 9 (1) sentence 3 no. 5 EStG). This limit covers the costs of using the accommodation — rent and utilities, for instance. Costs for the necessary furnishing and household goods of the second dwelling, by contrast, do not count towards it according to the case law of the Bundesfinanzhof (BFH — the Federal Fiscal Court) and are deductible on top (BFH, judgment of 4 April 2019, VI R 18/17). Having your own household requires not only occupying a dwelling but also contributing financially to the cost of living there.

Whether an individual case involves an Auswärtstätigkeit or doppelte Haushaltsführung has tangible consequences: unlimited deduction of actual costs in the first 48 months, against the 1,000-euro limit from the first month. The classification depends on the first place of work and the permanence of the assignment — exactly the kind of question that belongs in the hands of the tax adviser.

For the self-employed: business expenses instead of income-related expenses

Self-employed tradespeople and subcontractors claim accommodation costs not as income-related expenses but as business expenses — the principles of travel expense law apply correspondingly. Work-related overnight stays on assignments away from their own business premises are deductible at their actual, documented level.

Here too the receipt is what counts: invoices in the business name, proof of payment and documentation of the business occasion. Self-employed people entitled to deduct input VAT also benefit from the input VAT deduction on the accommodation invoice. The self-employed can claim subsistence allowances at the same rates as employees — including the three-month rule.

Anyone self-employed who is regularly out on assignment with their own people is best combining both: economical accommodation whose costs are cleanly documented, and a booking practice that runs on a company invoice from the outset. That makes the tax side as simple as possible — the binding assessment of the individual case is for the tax adviser.

The deduction routes at a glance

Three typical arrangements can be distinguished in practice — each with its own deduction route and its own documentation requirements. Knowing which one applies to you means collecting the right receipts from the start.

First arrangement: the company books and pays for the accommodation directly. The costs are a business expense, no wage is paid to the employee, and with a proper invoice the input VAT deduction is possible. This is the simplest route and the one to recommend for most businesses — an invoice in the company name is essential.

Second arrangement: the fitter pays himself and the employer reimburses. Reimbursement of documented costs is tax-free under § 3 no. 16 EStG; without a receipt, the 20-euro flat rate per domestic overnight stay is possible. The employee submits the receipts through the travel expense claim and the business books the reimbursement as a business expense.

Third arrangement: the fitter pays himself and is not reimbursed. What remains is the income-related expense deduction in his own tax return — at the actual, documented level, entered as travel expenses in Anlage N. Disciplined collection of receipts pays off directly here, because without proof the tax office will not recognise the costs. In all three cases: the more clearly the professional purpose is documented — place of work, period, contract — the more smoothly recognition runs.

Note: this article is provided for general information only and does not constitute tax advice. For an assessment of your specific case, please consult a tax adviser or another body authorised to provide tax advice.