By deducting your tuition costs, you can either recover taxes already paid or carry over to the next year by carrying forward losses. It is important here that your studies do not count as a first degree within the meaning of § 9(6) in conjunction with § 10(1) no. 7 EStG, since advertising costs can only be present under these conditions. In contrast, in the case of a first degree or initial training, there are special expenses, which are less advantageous than advertising costs.

Whether you can deduct tuition costs or training costs from the tax depends on whether this measure constitutes an initial education or a second education or further education. In the case of initial training, the costs are special expenses; in the case of a second training or a further training, there are advertising costs (§ 9 paragraph 6 in conjunction with § 10 paragraph 1 number 7 EStG).

2nd Costs Study: Advertising costs vs. special expenses

In principle, both advertising costs and special expenses can be deducted from the tax. The problem here, however, lies in the height and systematic nature of the law.

2.1. The Difference Between Special Expenditure and Advertising Costs

If you set the costs of your studies as special expenses, the deduction is limited to a maximum of EUR 6,000 per year. If you have more than the maximum amount of expenses, then the excess amount would not be deductible from the tax and would thus be "lost". Furthermore, special expenses cannot be used to carry forward losses.

In contrast to this, expenses are treated as advertising costs: advertising costs are fully deductible (without limitation) and can be used to carry forward losses. So it is always better if you can declare the expenses as advertising costs.

2.2. Loss carry forward

If you can deduct your tuition costs as advertising costs, you have the option of carrying forward losses. If you do not earn any income (e.g. wage/salary, no BAföG/student loan), but still have expenses (here: study costs), you will report a loss. This loss must be determined separately by the tax office, which is why you must file a tax return for these years.

Loss carry forward here means that the losses thus established are carried over to the following year, where they can then be offset against future income. In contrast to loss carry forward, there could also be loss carryback. Since students were very likely to have no income immediately in the previous year, one would rather use a loss carry forward.

3. When is studying an initial education, when not?

So the question we are looking at here is: When is an initial training (special expenses) and when is a second training (advertising costs) available?

The law stipulates that an initial training is available if the training or study course includes a minimum duration of 12 months and concludes with a final examination – or a comparable performance examination – and the initial training was carried out full-time. Full-time here stands for at least more than 20 hours per week in the scope of work.

This means that an initial education is basically a regular study (for example 6 semesters) or an education. On the other hand, this problem is mitigated for training courses: as long as the training is carried out under an employment relationship (for example, training agreement), the costs represent advertising costs.

A further problem can be so-called consecutive master courses. On 3 September 2015 (VI R 9/15, BStBl II 2016, 166), the Bundesfinanzhof (BFH) decided that both bachelor’s and subsequent master’s degree programmes can count as a joint initial education. The BFH hereby regarded the Master's degree program as part of the initial training and not part of a second training, which would be more favorable for the taxpayer.

A consecutive (simultaneous) Master’s degree program existed in the case of judgment because the Master’s degree program was adapted to the previous Bachelor’s degree program both in terms of time and content and that a certain professional goal was only achievable via the Master’s degree program. Such cases are usually rare in nature.

3.2 Dual studies

Exciting are also the cases in which a dual study takes place. A dual degree program comprises a usually shortened education and a bachelor's degree program together. Both parts even overlap in time. In such cases, there are advertising costs, since one completes both training and studying within the framework of an employment relationship.

Please note, however, that costs incurred by the employer for the employee may not represent advertising costs for the employee. These costs represent operating expenses for the employer and have already been “deducted from the tax” before.