Motor boats cost a lot of money. In practice, it would therefore be possible to deduct this sum from taxes. The Bundesfinanzhof (BFH) has decided when you can deduct expenses for a motor boat for tax purposes. We explain the conditions below.

Acquisition expenses reduce the tax burden. The statutory regulations on how the costs for economic goods, services or other things can be taxed can be found in §§ 4, 9 EStG. Acquisition expenses differ between operating expenses and advertising costs. Through § 9(5) EStG, the deduction restrictions for operating expenses of § 4(5) EStG also apply to advertising costs. In addition, companies subject to corporate tax are also subject to the deduction restrictions laid down in the Income Tax Act (§ 8 (1) KStG). For sailing yachts or motor yachts there is a deduction ban in § 4 paragraph 5 sentence 1 number 4 EStG.

The BFH had to decide on the case of a doctor. A doctor earns income from self-employment (§ 19 EStG) or – as an employed doctor – income from non-self-employment (§ 18 EStG). In the specific case, the doctor lived on the mainland. But he worked in a Klink on an island. To get to his job, he drove his motorboat. This significantly reduced the commute compared to the ferry journey. The tax office refused to deduct advertising costs on the basis of § 4 (5) sentence 1 no. 4 EStG. After an unsuccessful objection and an unsuccessful action before the tax court, BFH approved the taxpayer’s review.

Expenses for journeys between home and company or workplace, which are travelled with your own motor boat, are not generally excluded from the tax deduction. The wording of § 4 (5) sentence 1 no. 4 EStG suggests a corresponding exclusion of expenses. However, the journey serves to get to work. Expenses for journeys between operating sites are not excluded from the deduction because they are travelled by motor boat. Costs incurred for these journeys are not to be considered as expenses for sailing yachts or motor yachts, but as travel costs.

Expenditure on sailing yachts or motor yachts used for sporting activities, entertainment of business friends, leisure activities or representation is subject to the deduction ban. Therefore, the applicability of the withdrawal ban does not depend on the type of watercraft, but on its specific provision. However, the specific determination can be indicated by the type of motor boat. The fact that boats are regularly used for recreational purposes does not preclude any other use.

According to the understanding of the BFH, a yacht is a watercraft that is used for sports, leisure or even representation purposes. Whether a boat is used for such purposes must also be determined on the basis of external circumstances. The appearance of the vehicle may indicate in individual cases that it is intended for representation purposes. Therefore, even a boat of the type used for motor boat racing may indicate its exclusive purpose for sporting purposes. For representation expenses, it also depends on the length of the boat. A use for professional purposes can result in particular from the purpose of getting from a place to a place with a standard comparatively inexpensive type of boat in the shortest possible time at any time of the year and in any weather.

If the boat serves both professional and harmful purposes, you can not deduct tax on the motorboat in the case of mixed use only those expenses that serve the use of the vehicle for harmful purposes. The mixed use therefore does not result in an overall withdrawal ban. The deductible costs and the non-deductible costs caused by private use are distinguishable from each other, as in the case of the use of a motor vehicle. For this reason, the deduction ban of § 12 no. 1 EStG does not apply.

If, however, the costs of travelling by motorboat were fully deductible, the costs would be allowed to deduct to a greater extent than for travel by motor vehicle. Therefore, the costs are not fully deductible on motor boats. Rather, the deduction restriction for journeys between home and workplace apply analogously. This means that the 1% rule, the journey log method or the EUR 0.30 per kilometre rule applies. How you can arrange the deduction without the 1 percent rule and without the journey log method, we have described in another post.

The taxpayer is free from taxation the private or public transport with which he undertakes the journeys between home and work. In any case, expenses for these routes are deductible. However, the deduction restrictions in the form of the 1% rule, the journey log method or the EUR 0,30 rule apply analogously.