What you need to know: All costs related to your self-employed activity are business expenses. They reduce your profit and thus your income tax. This works automatically: Every deducted euro reduces your taxable income.

Specific areas:

1. Fully deductible: e.g., rent for business premises, office supplies, insurance, software subscriptions for your self-employment
2. Partially deductible: e.g., company vehicle, business meals (70%), your home office
3. Immediately deductible: Items up to 800€ net (so-called low-value assets/geringwertige Wirtschaftsgüter) can be fully claimed in the year of purchase ^[1]

→ Important for you: Keeping receipts is mandatory! Without proof, the tax office won't accept anything.

How it works: If you show VAT on invoices, you may reclaim the VAT you pay yourself via Vorsteuerabzug (VAT reclaim). You submit a Umsatzsteuervoranmeldung (advance VAT return) monthly or quarterly and only transfer the difference to the tax office.

Practical example: You receive 10,000 € (+ 1,900 € VAT = 11,900 €). At the same time, you buy office equipment for 3,000 € (+ 570 € VAT = 3,570 €). You only pay 1,330€ instead of 1,900€ VAT to the tax office: you've reclaimed the 570€.

Prerequisites:

1. You charge VAT yourself (no use of the Kleinunternehmerregelung (small business exemption))
2. The expenses are business-related
3. You have a proper invoice with displayed VAT

Private benefits: Through Vorsteuerabzug, business equipment effectively costs you 19% less: the tax office essentially covers this portion.

Until the end of 2027, you can depreciate movable assets (machinery, vehicles, IT equipment) using Degressive Abschreibung (declining balance depreciation). With up to 30% of acquisition costs in the first year.

For larger purchases, this gets you significantly more tax back in the first years than with classic straight-line depreciation — more on this in our Depreciation Guide. This improves your liquidity exactly when you need it.

Bonus for small businesses: Additionally, there's a Sonderabschreibung (special depreciation) of up to 40% of costs, combinable with Degressive Abschreibung. For an investment of 200,000 €, you can deduct 140,000€ in the first year.

Your advantage: You buy a new MacBook for 3,000€ in 2026. With Degressive Abschreibung (30%), you deduct 900€ in the first year. At a tax rate of 35%, you immediately save 315€ in taxes ^[3].

The rule: Entertainment expenses with business partners, clients, or freelancers are 70% deductible. The remaining 30% counts as a private portion because you save household costs.

What counts:

1. Food and drinks at restaurants
2. Tips and coat check (100% deductible here!)
3. All costs incurred during business occasions ^[5]

Requirement: The business occasion must be verifiable. This means: On the entertainment receipt, you note the names of participants, the occasion, and the topic of conversation.

Example: You invite a cooperation partner to lunch. Bill: 80€ + 10€ tip = 90€. Deductible: 66€ (70% of 80€ = 56€ + 10€ tip) ^[6].

Things you use both professionally and privately can be deducted proportionally. This mainly applies to ^[9]:

1. Vehicles: you can document business trips via a logbook or use the flat-rate 1% rule
2. Smartphone and internet plan: you can estimate proportional business use (often 50-80% business)
   • with >50% business use, it's even "necessary business assets" and can be deducted 100% (with proportional accounting of a "benefit in kind")
3. Your home office: you can deduct proportional costs for rent, electricity, and heating (only if it's a separate room, otherwise a flat rate applies)

Important: The split must be comprehensible. For vehicles, a logbook is recommended; for phone and internet, a plausible estimate usually suffices ^[9].

Your private benefit: Your car costs you less privately because the tax office covers the business portion. With 60% business use, the state effectively pays more than half your car costs ^[10].

You can retroactively record things you've previously used privately at their current market value as business expenses ^[12].

How it works: You determine the market value (e.g., with research on classified ads) and book this amount as a business expense. This works for desks, tablets, shelves, or other work equipment ^[12].

Example: Your private desk is now used for home office. Current value: 200 €. You record 200 € as a business expense. At a 35% tax rate, you save 70 € (for something you already own) ^[12].

Recurring costs:

1. Professional literature, online courses, continuing education
2. Membership fees in professional associations
3. Insurance (professional liability, legal protection)
4. Bank and account management fees
5. Subscriptions (tools, software, streaming services for research)

One-time investments:

6. Office furniture and technology under 800 € (immediately deductible)

7. Coworking memberships

8. Website costs and domain fees

Often forgotten:

9. Postage and shipping costs

10. Application photos and professional portraits

11. Gifts to business partners (up to 50 € per person/year)

Your advantage: The more consistently you record all expenses, the more you reduce your tax burden.

What the tax office doesn't accept:

1. Private expenses: Clothing (including business outfits), hairdresser, personal health insurance ^[1]
2. Missing receipts: Nothing is recognized without proof ^[1]
3. Flat-rate "private use": Mixed expenses must be split, not treated as a flat rate ^[9]

What you should watch out for:

1. Archive receipts digitally (10-year retention requirement)
2. Separate business and private expenses
3. When in doubt: Ask a tax advisor before deducting