Ask a tax advisor on the topic of Severance pay

Deductible attorney fees

June 21, 2011 | 20,00 EUR | answered by Michael Herrmann

Can legal fees incurred to assist in negotiating a severance package be deducted as increased advertising costs or otherwise, as they have been incurred for the purpose of generating income, similar to tax consulting costs? If so, to what extent?

Best regards

Michael Herrmann

Dear inquirer,

First of all, thank you for your inquiry, which I would be happy to answer based on the information you provided and in the context of your initial consultation. The response is based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.

Advertising costs include all expenses that serve the acquisition, securing, and maintenance of income. The legal fees were incurred to generate income from taxable wages. Therefore, there is no obstacle to deducting advertising costs.

The deduction is limited only by reasonableness. I cannot determine the exact amount you are allowed to deduct based on your information. If you are within a "normal" range, covered by the Lawyers' Fees Regulation, and economically justified in relation to the payment received, the fees should be considered reasonable.

I hope that these explanations have given you a sufficient overview of the situation in the context of your inquiry and initial consultation.

Best regards,

Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant