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Chamber fees as income‑related expenses for a trainee solicitor
The Federal Fiscal Court (BFG) has clarified that trainee solicitors can claim the compulsory chamber fees for membership of the Bar Association and the contributions to the pension scheme as income‑related expenses for tax purposes.
A trainee solicitor earned a gross annual salary of EUR 111,760.01 in 2022. His employer deducted a total of EUR 6,111.97 for the Bar Association and its pension scheme on his behalf. The amount consisted of: EUR 200 chamber fee, EUR 400 employer surcharge to the chamber fee and EUR 5,512 for the pension scheme (basic pension). The employer retained the full amount of EUR 6,111.97, but only accounted EUR 5,469.79 as an income‑related expense in the payroll accounting.
The trainee claimed the aforementioned chamber fees as income‑related expenses in his income‑tax assessment. The tax office, however, refused the deduction as an income‑related expense because the contributions had been paid by the employer. An examination by the BFG ultimately found that part of the chamber fees (the difference amount of EUR 642.17) had not been taken into account as an income‑related expense.
Decision of the Federal Fiscal Court (BFG)
According to the law, trainee solicitors are compulsorily members of the Bar Association. The mandatory contributions constitute income‑related expenses, as they are contributions to a legally established interest representation. Contributions to the pension and support scheme are also regarded as income‑related expenses when they serve social security purposes, such as health, accident, old‑age, disability or survivor benefits. As long as they correspond in amount to the statutory social insurance, the mandatory contributions are deductible.
In principle, the employer’s surcharge to the chamber fee is to be borne by the employer. In the present case, however, there was an internal agreement whereby the trainee solicitor paid this amount himself. Consequently, the amount meets the definition of an income‑related expense. Another important point is the claim. If chamber fees have already been fully accounted for as income‑related expenses in the payroll, they may not be claimed again in the tax return.
Conclusion
The decision confirms that chamber fees arising from a compulsory membership in a legally established interest representation are to be treated as income‑related expenses for tax purposes. This also includes surcharge amounts that are paid by the individual rather than the employer.
The trainee claimed the aforementioned chamber fees as income‑related expenses in his income‑tax assessment. The tax office, however, refused the deduction as an income‑related expense because the contributions had been paid by the employer. An examination by the BFG ultimately found that part of the chamber fees (the difference amount of EUR 642.17) had not been taken into account as an income‑related expense.
Decision of the Federal Fiscal Court (BFG)
According to the law, trainee solicitors are compulsorily members of the Bar Association. The mandatory contributions constitute income‑related expenses, as they are contributions to a legally established interest representation. Contributions to the pension and support scheme are also regarded as income‑related expenses when they serve social security purposes, such as health, accident, old‑age, disability or survivor benefits. As long as they correspond in amount to the statutory social insurance, the mandatory contributions are deductible.
In principle, the employer’s surcharge to the chamber fee is to be borne by the employer. In the present case, however, there was an internal agreement whereby the trainee solicitor paid this amount himself. Consequently, the amount meets the definition of an income‑related expense. Another important point is the claim. If chamber fees have already been fully accounted for as income‑related expenses in the payroll, they may not be claimed again in the tax return.
Conclusion
The decision confirms that chamber fees arising from a compulsory membership in a legally established interest representation are to be treated as income‑related expenses for tax purposes. This also includes surcharge amounts that are paid by the individual rather than the employer.