The Supreme Tax Court has held that the hotel costs of an employee for occasional overnight stays near the place of work rank as business expenses. This reverses the position taken in earlier cases.
The case was brought by an air hostess based in Frankfurt, but living far outside the town. Since her flights began and ended in Frankfurt, the flightplan sometimes forced her to spend the night in a hotel near the airport. The tax office rejected her claim to be allowed to deduct the hotel costs as business expenses by referring to a Supreme Tax Court case rejecting a similar claim for 1994 on the grounds that the business and private reasons for the expense were mixed. (If there are both business and private reasons for an expense, it is not deductible unless there are specific rules to the contrary). The tax office also rejected her alternative claim for double household relief, saying that occasionally taking a hotel room was not permanent enough to constitute a second household. The lower tax court sided with the tax office.
The Supreme Tax Court sided with the taxpayer. It agreed with the tax office that there was no case for double household relief, but held bluntly that the hotel costs were business expenses and, as such, deductible. They were incurred solely because of the occupation of the taxpayer and were in addition to her private costs of maintaining her own household. This case was at variance with the previous, 1994 case of a different senate and the normal procedure of a senate that wishes to depart from the law of another senate is to lay the matter before the Grand Senate - a larger body consisting of one judge from each of the eleven senates. However, the senate dealing with the present case chose to avoid that rather lengthy procedure by holding - with a clear preference for pragmatism over logical argument - that there had been in the meantime "such a basic change in the law that the senate was not departing from the decision of the XI. Senate".
Notwithstanding this success, the air hostess lost the other part of her case, a claim for the subsistence allowances of those on business trips whilst spending a day or more in Frankfurt on training courses. Here, the Court took the traditional - and otherwise generally undisputed - view, that a course held at an employee's place of work was not a business trip.
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