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Germany Tax Deductions

Personal Relief	Amount - EUR
Donations	Allowable up to 5% of gross income.
Business expenses (for an employed person)	A fixed annual deduction is allowed in the amount of EUR 920 without documentation. With documentation, a higher amount may be requested
Child allowance	Annual sum of EUR 1,824 for a child .Additional EUR 1,000 for a child under 14 years old.
Life insurance payments	Deductible up to a limit.
Insurance payments	An annual fixed deduction of up to a limit.
Alimony	up to EUR 13,805 per year.
Church Tax	Fully deductible
Travel Expenses(to/from work)	Up to EUR 4,500 per year.
Mortgage Interest	Can be set off against rental income.
Home Office	Up to EUR 1,250 per year.
Professional Travel	Fully deductible

BUSINESS DEDUCTIONS In addition to the deductions / credits that were listed above, deductions and business expenses may be claimed as follows:

Business Deductions	Amount - EUR
Offset of losses	Loss up to 1 million EUR can be offset forward in one year. Loss above this amount can be offset against 60% of the current year taxable income. Loss can be carried back one year.
Transactions between associated parties	These are transactions with associated companies with which there are significant ownerships or control associations. When transactions between associated parties are concerned, they are closely monitored by the tax authorities while comparing them to accepted market prices.
Consolidated statements	A parent company may submit consolidated tax statements for the subsidiary companies and so offset company profits against losses in other subsidiary companies. Submission of a consolidated statement is conditional on the parent company holding in excess of 50% of the voting rights in the subsidiary company.
Financing expenses	Interest is deductible up to 30% of the annual income before interest, depreciation and loss carried forward. The limitation does not apply to interest expense of up to EUR 1 million .

DEPRECIATION OF FIXED ASSETS

The customary method of depreciation in Germany is the depreciated balance method or the straight-line method.
In any case of depreciation according to the depreciated balance method it must not be more than twice the depreciation according to the straight-line method and must not be in excess of 20% per annum.
For fixed assets bought after 1.1.2008 only the straight line depreciation method is allowed.

The depreciation table (straight line) is as below:

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