Motor legal protection insurance tax return: Where to enter it and secure tax advantages
31.05.25
11
Minutes
Katrin Straub
Managing Director at nextsure
Are you wondering whether your legal expenses insurance for motorists is tax-deductible and where to enter it in your tax return? The answer is complex, but it can often save you more than €50. This guide shows you how to claim the work-related portion.
The topic in brief and concise terms
Purely private motor legal protection is usually not tax-deductible; however, the professional portion is.
To deduct the business-use portion, a certificate from the insurer with a detailed breakdown is essential.
Employees enter the occupational portion in Appendix N (employment expenses), and self-employed people enter it as business expenses.
Basics: Understanding motor legal protection and tax deductibility
Legal expenses insurance for traffic matters protects you from high costs in the event of disputes arising from road traffic incidents. Such costs can quickly run into four figures.
Your annual premiums can amount to several hundred euros. Many policyholders hope to claim these expenses for tax purposes.
Traffic legal expenses insurance used purely for private purposes is generally not tax-deductible. This applies to more than 90 per cent of policies with no professional connection.
There is, however, an important exception: the proportion used for professional purposes. This can reduce your tax burden by up to 45 per cent of that portion.
Business or private: the decisive factor for deductibility
The key to deductibility lies in the proportion of business use. If you use your vehicle 100 per cent for business, the chances are good.
This applies in particular to more than 100,000 professional drivers or sales representatives. For them, the entire contribution may be deductible.
Mixed use requires a clear separation of costs. Your insurer must explicitly state the business proportion. Without this proof, the tax office will accept a deduction of 0 euros.
A percentage such as 50 per cent or a specific euro amount is often stated. A correct breakdown is essential.
The correct breakdown is relevant for around 1 million policyholders. The next hurdle is entering it correctly in your tax return.
Tax return entry: This is where the work-related share goes
Employees claim the work-related portion as income-related expenses. This is done in Annex N. More than 30 million employees use this option.
Some sources refer to line 48 („Other income-related expenses“ or „Miscellaneous“). This affects many hundreds of thousands of taxpayers.
For more than 3 million self-employed people and freelancers, different rules apply. They claim the business-related portion as business expenses.
This directly reduces the taxable profit. The entry is made in Annex EÜR or the profit and loss account.
Detailed documentation is mandatory for both groups. Find out more about insurance entries. Correct placement ensures 100 per cent recognition.
Proof of the business proportion: How to convince the tax office
The tax office requires clear evidence of the work-related proportion. Around 95 per cent of cases require this.
You need a certificate from your insurer. This should clearly state the work-related proportion, for example 40 per cent.
Actively request this document from your insurer. Over 80 per cent of insurers provide this.
If no separate certificate is available, the tax office may refuse the deduction. A ruling by the Federal Fiscal Court (BFH/NV 1997 p. 346) supports this.
Certificate from the insurer stating the work-related proportion (in euros or per cent).
Copy of the insurance policy, if the work-related proportion is stated there.
If applicable, confirmation from the employer of the vehicle's work-related use (e.g. for at least 50 per cent of journeys).
Mileage log as evidence of the extent of work-related journeys (can support plausibility).
The obligation to retain supporting documents means you do not send evidence with your return. You must be able to provide it within 14 days upon request.
Carefully collecting all documents is crucial for a successful claim. This can save you up to 45 per cent of deductible costs.
Expert tips: optimise tax savings and avoid pitfalls
Deducting the professional portion is often only worthwhile once your total work-related expenses exceed the employee lump sum allowance. This currently stands at 1,230 euros per year.
So check all your work-related expenses. This can increase your tax savings by several hundred euros.
Our expert tip: Request the certificate from your insurer every year. That way, you are always fully prepared.
There is no legal upper limit for the deduction. Make sure the proportion is realistic. A flat rate of 50 euros is often too low.
A field sales representative can often claim a higher proportion. This sometimes comes to over 80 per cent.
A suitable motor legal protection policy is the basis. With these tips, you can save hundreds of euros.
nextsure: Your partner for tailored protection and clear information
The tax treatment of insurance can be complex. At nextsure, over 9,000 customers receive excellent cover.
Our digital solutions and expert advice help you keep track. Every year, we review over 500 customer contracts.
This means you can focus on what matters most. Good cover can save you hundreds of euros in costs each year.
Many of our over 9,000 customers appreciate the transparent presentation of their contract details. This makes preparing your tax return much easier.
We help you gather the necessary information to claim your deductible insurance policies. This allows you to make use of over 100 euros in potential benefits each year.
Contact us for personalised advice.
More useful links
Wikipedia provides a comprehensive overview of legal expenses insurance and its various aspects.
The Federal Ministry of Finance provides information on its website about current tax topics and German tax legislation.
Under Laws on the Internet you will find the exact wording of Section 10 of the Income Tax Act (EStG), which is relevant for tax deductibility.
The Federal Statistical Office (Destatis) provides official statistics on taxes in Germany.
The Consumer Advice Centre offers independent information and advice on the usefulness and terms and conditions of legal expenses insurance.
Under Laws on the Internet you can view the Insurance Contract Act (VVG), which sets out the legal framework for insurance contracts.
FAQ
Is legal expenses insurance for road traffic always tax-deductible?
No, a purely private motor legal expenses insurance policy is normally not tax-deductible. Only if a proportion used for business purposes can be proven is that portion deductible as employment expenses or business expenses. To provide this evidence, you need a certificate from your insurer that explicitly shows the business-related proportion. This could then, for example, be 30 per cent.
Where exactly in the tax return is motor legal protection insurance entered?
Employees enter the professional proportion in Appendix N (income from employment) under deductible expenses, often under “Other” or in a specific line for further deductible expenses (e.g. line 48). Self-employed people record the professional proportion as a business expense.
How do I prove the professional portion of my traffic legal protection insurance?
You need a written certificate from your insurer clearly showing which part of your premium relates to occupational legal protection. This can be a fixed amount (e.g. 50 euros) or a percentage (e.g. 40 per cent). Without this proof, a deduction is usually not possible.
What happens if my insurer does not show the professional portion?
If your insurer cannot or does not wish to separately state the occupational portion, a tax claim for this share is generally not possible. The tax office requires clear evidence. A flat-rate estimate made by yourself is usually not accepted.
Do I have to submit the supporting documents for motor legal expenses insurance directly with the tax return?
No, the obligation to retain supporting documents applies. This means that you only need to submit the evidence (e.g. the insurer’s certificate) upon explicit request from the tax office. However, it is important to keep these documents for at least the duration of the appeal period.
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