Tax Return: How to Deduct Account Management Fees!

With account management fees, the crucial factor is whether you are acting as an employee or as a freelancer or trader. In the first case, the tax authority recognises account management fees as employment-related expenses (Werbungskosten). In the second case, these fees constitute business expenses that reduce profit and therefore the basis used to calculate the tax assessment.

For many years, numerous banks advertised fee-free account models — those days are gone. Most providers now charge a monthly or annual base fee, and further costs such as cash withdrawal fees may be added. In principle, you can declare all account management and card fees as tax-reducing employment-related expenses or business expenses, provided there is a professional or commercial reason for them. This applies to the following types of fee:

• Base fee for account management
• Base fee for debit card and credit card
• Transfer fees
• Fees for paying in and withdrawing cash
• Usage charges for card payments

You may also claim interest for tax purposes, provided it is connected with a business activity. This applies expressly to overdraft interest on an account used for business purposes.

For employees, fees for a current account are treated as employment-related expenses. The tax office recognises these account management fees when the salary is received into the account in question. Transfers for the purchase of work equipment and similar items are also relevant.

Taxpayers can choose between a flat-rate solution and calculating the actual costs. Under the first option, they declare 16 euros per year. It is important that the bank charges a fee for the current account. If the account is free of charge, you may not use this flat-rate rule. If fees are charged, the exact amount is irrelevant.

Under the second option, you must separate the professionally motivated transactions from private use. Calculate precisely which costs are attributable to your employment. In practice, this rule is rarely applied, as it involves considerable effort for little benefit.

Enter the flat-rate amount or the actual costs in Annex N (Anlage N), line 48.

For freelancers and traders, account management charges are treated as business expenses that directly reduce profit. You report the fees paid to your tax office in the EUER form.

Ideally, you will have a separate business account, as this simplifies matters considerably. Add up all booking items from your bank. Do not forget costs such as fees for debit and credit cards. Many providers charge transaction fees for incoming and outgoing entries on business accounts — the tax office also accepts these as business expenses. The same applies to transaction fees charged by financial service providers such as PayPal.

For a current account used for both purposes, you must break down the costs in detail. Set out transparently for the tax office why you are attributing a certain proportion of the account management fees to business expenses.

Enter the fees in line 66 of the EUER annex under the heading "Other unrestricted deductible business expenses (including repaid grants/subsidies relating to the Covid-19 pandemic)".

If you entrust your tax returns to your Guhr Steuerberatung, experienced specialists will take care of the tax deductibility of account management fees. For accounts used for both purposes, your tax experts will calculate a transparent proportion of the costs attributable to professional use.

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