Finding a job can be costly. And it’s a time you need to invest in your future.
This is no good news, because who has any money to give away?
It takes a few months to write your applications, have initial interviews with recruiters and then later on with HR and Managers. It may take months until all the interviews are completed and a work contract with the signature of the managing director is in front of you. During this period all the costs of daily life accumulate: Rent, food, insurances and everything else you use on the side.
In addition, there are the costs caused by the job search itself.
These can be costs for copies, travel expenses, hotel accommodation, application photos of the professional photographer, phone calls, the fees for LinkedIn (at least if you have donated the Pro version). For a workshop to create your CV or Cover letter to apply at German companies, or a coaching session to brainstorm how to answer the HR-questions or the nasty ‘tell us about yourself’ question in an interview.
All this can add up to quite a lot of money over a few months.
If you currently have a job or are on short-time work, you can afford the investment associated with the job search.
However, it’s much more difficult for students to cover these costs. They have few opportunities to earn money. In a similar situation are unemployed or people who work but earn very little money.
But there is also good news which can help. You can consider all costs connected with your application and job search in your future income tax return. This is basically done by a reimbursement to your account. This doesn’t help at the moment of issue, but at a later date this refund will appear on your account and will feel like a surprising gift. At least for me, because around Feb or March it’s the time of year when I’ve just paid my annually insurance fees.
You may consider all costs connected with your application and job search in your future income tax return.
Application and job search costs tax deductible
The term important for the German tax return is “Werbungskosten”. All costs incurred with job search and application belong to this category and can be considered in the tax return.
These are all costs or “expenditures that are made to earn, secure and maintain income”. Or in other words: all costs that are necessary to be able to exercise a profession.
These include, among others
- Daily commute to work
- Work equipment (work clothes, reference books, briefcase, tools, laptop, PC, mobile phone, software)
- Business trips
- Study or home office
- Membership fees for professional associations (e.g. VDI, trade union etc.)
- Professional insurance contributions (e.g. professional liability)
- Occupationally induced removals
- Further training
It’s also important to understand that the application costs and search costs are costs that arise IN CONNECTION with the job search. That means it’s irrelevant, though, whether these lead to success or not.
If you currently have a job, you can consider these costs in your tax return WITHOUT having to prove that you have signed a new contract.
What does “deduct” mean?
At the end of the year respectively at the beginning of a calendar year, every employed person can submit a tax return to the local tax office (Finanzamt) for the previous calendar year. It’s not mandatory in every case and for every person, but recommendable.
If you don’t have a job yet, but you’re planning to sign a contract with an employer in the course of the year, you can naturally file a tax return.
The income tax contributions are automatically deducted from your gross salary together with the other social security contributions. The amount of tax is based on your gross monthly income. The more you earn, the more taxes you pay. Or the other way around, if you don’t earn that much money in your first job, you pay less in percentage terms.
In your tax return you can state your annual “income-related expenses”, and this includes the application costs. The tax office will then adjust your income tax downwards and refund the amount. It is essential, however, that you have evidence in your records for every Euro you spent in connection with your job search.
Evidence should be kept
It is important that you keep receipts and invoices for everything that has cost you money in finding a job. Please make sure that you take a photocopy of the original receipts because the original receipts fade and are no longer legible after a few months.
Be sure that you list all costs in detail and record them in a transparent way, e.g. in an Excel list with date, company and status.
The receipts for the application costs do not have to be sent directly to the tax office, instead you must save them. As evidence for an application, you can also keep, for example, the rejection letters of the companies you have applied to.
Two ways to deduct application costs from your tax declaration
Tax law provides two ways in which application costs can be claimed for tax purposes.
- Option 1: Settle the receipts for expenses individually.
- Option 2: Deduct the application costs as a lump sum.
In the first option, you enter the costs incurred individually. You need to save all receipts and their photocopy.
In the second option, you must enter the number of applications and multiply it by an amount in euros. For an online application you can deduct 2,50 Euro per online application.
If you have Werbungskosten (advertising costs) of less than 1,000 Euro in one year, you don’t have to make a big effort to list your application costs. In that case you can also simply use the employee lump sum of 1,000 euros. Only if you have Werbungkosten (advertising costs) of more than 1,000 euros it’s worthwhile to provide proof of your application costs.
Lump sum for “Werbungskosten” advertising costs
One more hint before you dance through your living room full of anticipation and dollar signs in your eyes:
Every so-called income-related expenditure that falls into the category of “Werbungskosten” like listed above, has its own specific criteria.
These must be strictly adhered to.
For example, there are very clear guidelines as to when exactly a workroom in your home is accepted as a workroom for tax purposes. Among other things, the requirements for a private workroom are causing a lot of frustration. And a lot of us are in need of it right now, because of Corona home office regulations.
So before you start a big shopping tour and buy a luxury desk with an Executive Chair, be sure to know exactly which requirements apply.
Help with tax return
Now if you think this might get complicated, you’re right. Especially if you haven’t done a tax return in Germany yet, I recommend getting help.
When you are a “basic” case (not married, no children, no special circumstances) then the tax return is not quite that complicated. For all other cases, you’ll have so many peculiarities and exceptions that I recommend you get professional assistance at least for filling it out for the first time. I’m not a tax advisor myself and ask for help as well.
A good address to be supported is the Lohnsteuerhilfe. This is an association where you can join and benefit from special support packages.
As a rule, you don’t need a tax consultant (Steuerberater), unless you are self-employed or self-employed on the side, have assets, a house and are seeking additional options for taking advantage of the German tax rules smart.
In the following you get a detailed overview about the costs related to the job search and “Werbungskosten”.
Checklist of deductible job search costs
💲1 Costs for “self-marketing”:
- Professional application photos by a photograher
- Newspaper advertisements and online ads
- an own website
- proportionate telephone costs
- also proportionate internet costs
- application video
- Costs for career networks like Xing or LinkedIn (if you decide it’s worth it)
💲2 Materials for applications
- Printer device
- Printer Cartridges
- Copies in the copy shop
- Application folders and postage (for oldfashioned applications via post)
- Writing materials
- see-through plastic sleeves
💲3 Preparing for job interviews
- Application coaching and career advice fees
- Specialist books
- Seminars or courses to train for the job
- Language courses
- Translation costs for documents, cover letter or CV
- Authentication of certificates – some authorities require authenticated certificates
- Police clearance certificate
💲4 Travel expenses
- Travel to the job interview if the employer or the Federal Employment Agency does not pay for it (train and bus ticket, kilometer rate if car and parking fees)
- Accommodation costs, which you will pay for yourself if the company doesn’t
- So-called “additional food expenses”/(“Verpflegungsmehraufwand”) for days on which you are absent from your place of residence for the application
Your next step 💪
You have got a first idea of what costs you can recoup through tax.
Make an excel-list today, and start recording. Place a special plastic bag or sheet for the receipts close to your financial documents. You still have time to decide how you will deduct the costs.