As a general rule, self-employed people can only deduct their travel costs to work as business expenses up to the amount of the mileage allowance if they travel to a fixed place of business. However, the Federal Fiscal Court has now clarified in an important ruling when such a permanent establishment can be said to exist, thereby fundamentally changing its previous case law on maritime pilots.
What was the case about?
A maritime pilot earned income from self-employment. He drove from his flat in his own car to a long-stay car park near a landing stage, boarded a boat there to reach the vessel he was to pilot, and regularly spent his waiting time between assignments at a pilot station. On two days a month, he also carried out radar duties at a radar station.
The maritime pilot claimed his total travel expenses from his home to his places of work, as well as additional meal expenses, as business expenses. The tax office sought to limit the travel expenses to the significantly lower mileage allowance, as it assumed he was working from a permanent establishment.
Decision: No permanent establishment, no reduction
The Federal Fiscal Court ruled in favour of the maritime pilot and upheld the ruling of the tax court. Neither the long-stay car park nor the pilot stations nor the ships to be piloted themselves constitute a permanent establishment for tax purposes.
According to the Federal Fiscal Court (BFH), the following conditions are mandatory for a permanent establishment within the meaning of Section 4(5), first sentence, No. 6 of the Income Tax Act (EStG):
- There must be a fixed, permanent business premises.
- The self-employed person must visit this place not just occasionally, but regularly and on an ongoing basis.
- The location must be the geographical centre of the permanently established activity.
- Simply carrying out auxiliary or ancillary tasks is not sufficient.
As the claimant used the pilot stations mainly for waiting periods and minor tasks, the decisive criterion was missing: the centre of his work.
A departure from previous case law
It is particularly significant that the Federal Fiscal Court (BFH) has explicitly departed from its previous position. Until now, it had regarded the entire pilotage area of a maritime pilot as a so-called ‘extensive permanent establishment’. Following the 2013 reform of tax law on travel expenses, this view no longer applies. In the court’s view, the aim at the time of ensuring equal treatment of employees and the self-employed with regard to travel expenses must not result in a large area being deemed, as a matter of course, to constitute a permanent establishment if the statutory requirements for this are not met.
What does this mean for the self-employed?
The ruling has implications far beyond the specific case of the maritime pilot. Self-employed individuals whose work does not take place at a fixed, clearly defined location, but who travel to different places of work, may, under certain circumstances, be able to deduct their actual travel costs in full as business expenses. The more favourable rule of full reimbursement of travel expenses, as opposed to the mileage allowance, can result in significant differences in tax liability.
Whether one’s own activities meet the criteria for a permanent establishment always depends on the specific circumstances of the individual case. Anyone who is unsure about this should have the situation assessed from a tax perspective.
Federal Fiscal Court (BFH), judgement of 23 June 2026, Case No. VIII R 13/24
Source: Haufe: Tax
This post and the accompanying image were created with the help of AI and have been editorially reviewed.
