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By: Johannes Fein, Esq.
WINHELLER Attorneys at Law & Tax Advisors
Frankfurt, Germany

A managing director of a German Limited Liability Company (GmbH) was the owner of a small private plane and in possession of a corresponding pilot's license. Of the 111 flight hours per year, approx. 30 were attributable to flights for keeping business-related outside appointments. For the latter he claimed professional expense deduction at the revenue office. In doing so, he invoked the time saved, the emergency nature of the appointments, and the saving of accommodation costs.

The Finance Court of the Federal State of Hessen decided that the expenditures claimed for the use of the private plane are not deductible as professional expenses. Pursuant to the overall circumstances, the businessman had chosen the private plane for the joy of flying and thus it were private motives deciding the type of transport.

Indeed, the traveling or absence time has been shortened by the use of his private plane. At the same time, however, in contrast to scheduled flights and train rides, there was no time for telephone calls, review of business documents or electronic communication. Therefore, the court did also not consider the pro-rated expenses in the amount of EUR 25,000 to EUR 30,000 for the acquisition of the international flight license to be deductible. The managing director did not need the pilot's license for the job activities carried out by him.

Please Note: Caution should be exercised in allowing such costs to be borne by the company. Here, under certain circumstances, the risk of criminal liability exists due to breach of trust. The possibility of deducting expenses as professional expenses always depends on the respective context. We will gladly advise you as to which of your expenses are deductible and which ones are not.

Finance court Hessen, decision of  14.10.2014, Az. 4 K 781/12

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