Most people dread their tax return every year, but it can often bring pleasant surprises. This is the case, for example, if you can expect a tax refund a few months later. At its core, this means that you have paid too much tax throughout the year. In some cases, however, such as renting storage space, the refund may occur because you made purchases or entered into business obligations during the tax year that you were not even aware of at the beginning of the year.
Storage is among the costs that companies, self-employed individuals, and private persons can deduct from their taxes. The rent you pay for your storage during the year reduces the taxable amount and thus your tax liability.
It is important to note that your storage must also be used for business or professional purposes. In the following, we provide you with an overview of when you can deduct your storage in your income tax return or your annual financial statement in accordance with applicable tax law and which requirements must be met.
When can you deduct a storage unit for tax purposes?
As already mentioned, your storage unit can only be deducted from tax if you can prove to the tax office (Finanzamt) that it is also used for business or professional purposes.
You do not need to be registered as a business (Gewerbe), but can also deduct your storage costs as a freelancer or in connection with secondary income that you declare in your tax return.
In most cases, you can claim your storage space for tax purposes if you store the following items with a professional storage provider (more on this below):
- Tools that you need due to your professional activity but for which you have no space at home.
- Business inventory
- Goods that you sell and whose trade you declare for tax purposes. This is particularly relevant for e-commerce merchants
- Machines and spare parts that you need for your business or professional activity.
- Your accounting records from previous years as well as other archives that are important for your professional activity.
- Office supplies that are essential for your business.
The rent for the storage unit for the above-mentioned items is usually automatically included in the monthly or quarterly accounting of businesses. Private individuals who want to deduct their storage costs must, however, convince the tax office that the storage is truly work-related and necessary.
Therefore, make sure that the storage is clearly used for professional or business purposes. Do not mix privately used household items with your professionally used tools in the storage unit. It is also more convincing for the tax office if you create an inventory list of the professionally stored items and can present it.
If you use the rented storage unit, whose rent you want to deduct in your tax return, for an e-commerce activity, it is advisable to integrate the storage as a logistical and operational component of your activity. This includes, among other things, digital warehouse management systems and regularly applied routines related to storage.
If you implement the mentioned measures, you will find it much easier to defend the plausibility and necessity of the storage to the tax office during an audit.
Can I deduct storage during a move?
If you move for professional reasons, the tax office offers you the option to deduct the move through a flat-rate allowance. The amount of the allowance increases every year and takes into account not only yourself but also your partner and any children.
The tax office assumes that the flat rate covers all moving costs, including any temporary storage of your household goods and inventory. The flat rate is generally considered generous but may not be sufficient in some cases to cover all costs.
If you incur significantly higher costs than those covered by the flat rate, you can deduct them in your tax return under the category “income-related expenses” (Werbungskosten) by submitting receipts/invoices. However, by doing so, you automatically waive the flat rate.
Please note that the temporary storage of your inventory is only accepted under certain circumstances specified in detail by the tax office.
Your invoice for storing your furniture and household items is only tax-deductible if you move abroad for professional reasons and store your furniture and household goods. The tax office stipulates that you may only deduct storage if you cannot take your furniture with you for professional reasons.
If you only store your inventory temporarily because, for example, the apartment is not yet ready, the incurred amount cannot be deducted from tax.
In addition, neither the flat rate nor the income-related expenses can be applied in the tax return if your employer reimburses the expenses for your move.
Who can deduct the costs and where do you enter them?
As a prerequisite for deducting the rent of your storage facility from tax, the existence of a proper invoice is initially required. If you have stored your items with a professional storage provider, they will send you a proper weekly or monthly invoice that includes all mandatory information within the meaning of VAT law.
In the annual financial statement of businesses, the total of the invoices is then listed in the relevant category for operating expenses in the profit and loss statement (GuV – profit and loss account) and deducted from operating income to determine the taxable amount.
Freelancers and self-employed individuals can enter the same invoice as an operating expense in their income surplus calculation (EÜR) and offset it against their income.
Private individuals who carry out a taxable secondary activity or need to store items for professional reasons can list the storage costs in the tax return as income-related expenses (Werbungskosten) and submit the receipts for recognition by the tax office. As a rule, you should expect that the tax office will ask for a clear professional connection.
If you have a tax advisor and/or accountant, they will carry out the proper steps for you. However, this requires that you keep your documents in an orderly and clean condition.
At the same time, ensure that the storage unit you want to deduct from tax is clearly used as a business or professional storage. Boxes with toys, clothing, sports equipment, etc., that are mixed with your professional tools or business assets will raise red flags during an inspection by the tax office and may prevent you from deducting the storage costs from tax.
