Until 2006, the costs for travelling between home and work could be deducted as income-related expenses according to § 9 EStG or as business expenses according to § 4 EStG from income subject to income tax. In principle, this was done in the form of a lump sum per working day, independent of the actual costs incurred, amounting to € 0.30 per kilometre (commuter lump sum). With effect from 2007, the legislator determined in § 9, para. 2, sentence 1 and sentence 2 EStG (correspondingly also in § 4, para. 5a EStG) that the expenses for travelling to the regular place of work are not income-related expenses (sentence 1), but that "to compensate for increased expenses" for journeys from the 21st distance kilometre onwards, a lump sum of € 0.30 is to be assessed "as income-related expenses" (sentence 2). The basic introduction of the so-called works gate principle according to sentence 1 was justified in the legislative process with the aim of necessary consolidation of the excessively indebted state budget (through expected annual additional revenue of about € 2.53 billion), the remaining deductibility of increased expenses for longer distances as a supplementary hardship regulation.
In response to the submissions of the Lower Saxony and Saarland Fiscal Courts and the Federal Fiscal Court, the Second Senate of the Federal Constitutional Court ruled that these new regulations are not compatible with the requirements of the general principle of equality of Article 3 (1) of the Basic Law for a consistent structuring of income tax burden decisions and are unconstitutional due to a lack of constitutionally viable justification.
Accordingly, the legislature is obliged to eliminate the unconstitutionality retroactively to 1 January 2007 by restructuring the legal situation.
Until the new legal regulation, the flat rate of § 9 para. 2 sentence 2 EStG is to be applied - for the time being - without the restriction to distances only from the 21st kilometre.
This means that all commuters can claim € 0.30 per distance kilometre between their place of residence and place of work for tax purposes from the first kilometre onwards, retroactively to 01.01.2007 for the years 2007 and 2008.
Source: Press release of the BVerfG of No. 103/2008 of 9 December 2008
For further information, please see the text of the judgment at: http://www.bundesverfassungsgericht.de/entscheidungen/ls20081209_2bvl000107.html
© Goldberg Attorneys at Law, Wuppertal-Solingen 2008
Attorney at Law Michael Ullrich, LL.M.(Information Law)
m.ullrich@goldberg.de
