Double household management at the place of work in Italy
February 19, 2014 | 30,00 EUR | answered by Michael Herrmann
Hello,
I have a question regarding the possibility of deducting a second residence abroad. I have just signed a contract for a job in Italy, but I live in Berlin with my (registered) life partner in a shared apartment.
During negotiations for the new job, my salary was increased to cover two round-trip flights home (to my main place of residence) per month and a small apartment at the workplace. I would still like to know if it is generally possible to deduct the second residence at the workplace (and related expenses for maintaining two households) and the flights from taxes.
I know that I will be liable for taxes in Italy, so this is more of a question for Italian tax law. However, I would also appreciate an answer regarding the corresponding German regulations, or if anyone knows if there are relevant EU regulations in this matter.
Thank you in advance.
J. Mallwitz
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer based on the information provided and considering your situation in the context of an initial consultation. The response is based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
From the information provided, it appears that you are residing in Berlin. Therefore, you are subject to unlimited tax liability in Germany. You will pay taxes on your Italian income in Italy according to the double taxation agreement. If you have other taxable income in Germany, it will be taxed here as normal. However, to determine the tax rate on the remaining taxable income in Germany, the Italian employment income will be added (it is subject to the so-called progression clause).
The income from employment is calculated according to German tax law for this purpose. Additionally, the costs of maintaining two households are deductible. These costs reduce the income subject to the progression clause. The costs include flight expenses and transportation costs to the airport up to once a week.
I hope this information provides you with a sufficient overview of the situation in the context of your situation and this initial consultation.
Best regards,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax Advisor
