Whether travel expenses incurred when using a taxi may be deducted above the simple distance allowance pursuant to § 9 Abs. 1 S. 3 Nr. 4 EStG is discussed below on the basis of a BFH ruling.
Case in dispute: Are taxi expenses deductible in place of the distance allowance?
The claimants are a married couple, with the husband being unable to drive a car on his own due to a physical impairment. For this reason, during the years in dispute (2016 and 2017), he used a taxi to travel between his home and his primary place of work. The claimant deducted the resulting travel expenses from his income from employment in his income tax return, even though these exceeded the deduction available under the simple distance allowance. In the claimant's view, a taxi qualifies as a public means of transport within the meaning of § 9 Abs. 2 S. 2 EStG, which would permit a higher deduction of income-related expenses. After thorough review, the competent tax office decided to recognise only the simple distance allowance of EUR 0.30 per kilometre (§ 9 Abs. 1 Nr. 4 EStG).
BFH ruling (9 June 2022, VI R 26/20):
Under § 9 Abs. 1 S. 3 Nr. 4 S. 1 of the Einkommensteuergesetz, expenses incurred by an employee for travel between home and the primary place of work also qualify as income-related expenses. To compensate for these expenses, § 9 Abs. 1 S. 3 Nr. 4 S. 2 EStG, in the version applicable in the years in dispute, provides for a distance allowance of EUR 0.30 per full kilometre of distance between home and primary place of work for each working day. Pursuant to § 9 Abs. 2 S. 2 EStG, expenses for the use of public means of transport may also be claimed to the extent they exceed the total distance allowance deductible in the calendar year.
However, the term "public means of transport" is not precisely defined in the Einkommensteuergesetz. It is an indeterminate legal term. As guidance for classifying a taxi, it should be noted that the transport of persons by motor vehicle in occasional traffic requires a permit. This indicates that a taxi is not to be regarded as a public means of transport. In addition, the background of the distance allowance must be taken into account. With the Act on the Introduction of a Distance Allowance, the legislator introduced, with effect from 1 January 2001, a distance allowance independent of the means of transport, for environmental and transport policy reasons. Its purpose was to ensure that the use of a motor vehicle would no longer be favoured for tax purposes where the costs of using a public means of transport are lower. The measures adopted by the legislator were aimed at the use of public means of transport in scheduled service. The use of a taxi, by contrast, does not contribute to environmental and transport policy improvements to any heightened degree and is therefore comparable to a motor vehicle. The BFH concluded that a taxi is not to be regarded as a public means of transport within the meaning of § 9 Abs. 2 S. 2 EStG and that the claimant's travel between home and primary place of work was therefore fully compensated by the simple distance allowance under § 9 Abs. 1 S. 3 Nr. 4 S. 2 EStG.
Frequently asked questions
Frequently asked questions
Does a taxi qualify as public transport within the meaning of § 9 Abs. 2 S. 2 EStG?
No. In its ruling of 9 June 2022 (VI R 26/20), the BFH held that a taxi does not constitute public transport within the meaning of § 9 Abs. 2 S. 2 EStG. When privileging public transport, the legislator had scheduled-line services in mind, not licence-required occasional transport by taxi.
Can taxi costs for trips to the primary place of work be deducted beyond the commuter allowance?
No. According to BFH case law, a taxi does not qualify as public transport, so trips between home and the primary place of work by taxi are only deductible at the commuter allowance rate (€0.30 per kilometer of distance in the years in dispute). The option under § 9 Abs. 2 S. 2 EStG to deduct higher actual costs does not apply.
Does a physical impairment of the employee play a role in assessing taxi costs?
A physical impairment is irrelevant when classifying a taxi as public transport under § 9 Abs. 2 S. 2 EStG. Even if the employee depends on a taxi for health reasons, the deduction is limited to the standard distance allowance (Entfernungspauschale). Any further deduction would only be possible under separate provisions, such as extraordinary expenses (außergewöhnliche Belastungen).
Why does the legislator treat public transport more favorably than cars or taxis?
With the transport-mode-independent distance allowance introduced on 1 January 2001, the legislator pursued environmental and transport policy goals. Use of scheduled public transport was no longer to be disadvantaged compared with the car. Since a taxi is used individually like a car and does not make a comparable ecological contribution, it is not granted privileged treatment.
Which provision governs the deduction of work-related expenses for trips between home and the primary place of work?
The relevant provision is § 9 Abs. 1 S. 3 Nr. 4 EStG. Under this rule, expenses are covered on a flat-rate basis by the commuter allowance (Entfernungspauschale) per full kilometer of distance. Higher actual expenses may only be claimed under § 9 Abs. 2 S. 2 EStG when public transportation is used – not for car or taxi travel.