Language courses paid by the employer: when they are tax-free

Is a language course paid by the employer tax-free?

As a rule, yes. If the employer pays for a language course because employees need the language at work, it does not count as wages under R 19.7 of the Wage Tax Guidelines (LStR). Otherwise, vocational training is often tax-free under Section 3 No. 19 of the Income Tax Act (EStG). It becomes taxable mainly when it is a reward.

In practice, this means that if you support English for client meetings, German for everyday work or French for sales in France, you can usually fund the course without wage tax or social security contributions. For the company, the costs are business expenses. You can see how this works in practice with our language training for companies and teams.

Two routes to tax exemption

Please note: this article is not tax advice. It summarises the general position as of November 2026. Clarify individual cases with your tax adviser or by requesting a binding wage tax ruling (Anrufungsauskunft) from the tax office responsible for your business premises (Betriebsstättenfinanzamt).

R 19.7 LStR: what “overriding business interest” means

An overriding business interest exists when the training is intended to make employees more effective in the company. For language courses, R 19.7 sets a clear condition: the employer requires the language skills for the area of work planned for that person. It makes no difference whether the training takes place in-house, with an external provider or online.

The Wage Tax Guidelines are administrative instructions that tax offices follow. You can find the current wording in the official Wage Tax Handbook of the Federal Ministry of Finance (R 19.7 LStR) (in German). In everyday language, people often talk about “eigenbetriebliches Interesse” (the company’s own interest), while the guideline speaks of “ganz überwiegendes betriebliches Interesse” (overriding business interest). Both mean the same thing.

How the tax office recognises the business interest

• The language is needed in the current role or in a specifically planned role.
• The course content matches the tasks, for example meetings, negotiations or client correspondence.
• The employer initiated the course or expressly approved it.
• Attendance counts fully or partly as working time. This is not compulsory, but under R 19.7 such crediting makes further checks unnecessary, as long as there are no indications of a reward.

What is not required

Employees do not have to take an exam, and the course does not have to be purely about specialist language. General English at B1 or B2 can also be in the business interest if it forms the basis for the work. Our article on planning corporate language training describes how to define the needs for each role.

Section 3 No. 19 EStG: tax-free training as a second safeguard

Section 3 No. 19 EStG exempts from tax any training provided by the employer that serves to improve the employee’s employability. The rule also applies if the business interest under R 19.7 does not clearly prevail, for example with general English that has no fixed link to the current job. Benefits that are mainly a reward are excluded.

The law refers to training services provided by the employer, or by a third party at the employer’s instigation, that serve to improve the employee’s employability (Section 3 No. 19 EStG, in German). Foreign language skills improve employability in many professions, which is why language courses are a typical case.

How the two rules work together

Payroll checks R 19.7 first. If there is an overriding business interest, no wages arise. If not, the benefit is in principle part of wages but can be tax-free under Section 3 No. 19 EStG. The Wage Tax Handbook expressly refers to this sequence. For employees, the result is usually the same: no tax on the course.

Consequences for employees

Because they do not bear the costs themselves, employees cannot claim Werbungskosten (work-related expenses) for a fully paid course. If you pay part of it yourself, you can only deduct that part.

Should the invoice go to the employer or to the employee?

The simplest option is an invoice addressed directly to the company. The company can then book the costs as business expenses and reclaim input VAT. If the employee is the invoice recipient, the tax exemption under R 19.7 only applies if the employer promised in writing to cover the costs before the contract was signed.

Option 1: contract and invoice via the company

The company books the course, the invoice is made out to the company, and the invoice text states the participants’ names, the period and the scope. We recommend this option to HR departments because it needs little coordination and is clearly documented for tax audits. At choices®, we can invoice your company directly on request. Corporate courses start from €40 net plus VAT per 45-minute lesson.

Option 2: the employee books, the employer reimburses

This option is possible but more prone to errors. Before booking, you need a written commitment from the employer, either a general one, such as in a training policy, or one for the specific course. If the commitment is missing or only comes after the contract is signed, the tax office may treat the reimbursement as taxable wages.

German courses and integration courses for international professionals

If a company pays for German courses for employees whose first language is not German, the same principles apply. The official notes on R 19.7 make it clear that such courses are in the overriding business interest if the employer requires German skills for the planned area of work. Only concrete signs of a reward make them wages.

The basis is a letter from the Federal Ministry of Finance (BMF) dated 4 July 2017, to which the notes in the Wage Tax Handbook refer (H 19.7 LStH, keyword “Deutschkurse”, in German). It was originally written with refugees in mind, but according to the wording of the notes it also applies to other employees whose first language is not German.

Integration courses and job-related German courses

State-funded integration courses and job-related German courses (Berufssprachkurse) are organised through the Federal Office for Migration and Refugees (BAMF). If the employer pays a personal contribution for these, the same wage tax considerations apply to that payment. Companies that want to support their skilled workers faster, more flexibly or outside working hours often complement the public offers with private online German courses.

You will find practical advice on induction in our article on onboarding international employees.

When does a language course become a taxable benefit after all?

A language course becomes taxable when it no longer serves the work but mainly private enjoyment or a reward. Typical examples are language holidays with a tourist programme, courses for family members, languages with no connection whatsoever to the job, or courses given only to top performers as a bonus. In those cases, the value must be taxed as wages.

If a course is classified as wages, it is generally also relevant for social security. If in doubt, it is worth requesting a binding ruling under Section 42e EStG (Anrufungsauskunft) from the tax office responsible for your business premises. It gives the employer legal certainty for wage tax.

Documentation for HR: what belongs in the file

HR should record four things: why the role needs the language, who initiated the course, what it cost and that it actually took place. With a job profile, a short agreement, the invoice and proof of attendance, you are well prepared for a wage tax audit. Progress reports also show the benefit to the business.

Checklist

• Need: a job profile or task description with the language requirement, for example “English B2 for client correspondence”
• Initiation: a training agreement or an email from the manager, dated before the course starts
• Commitment: if the invoice goes to the employee, a written promise to cover the costs before the contract is signed
• Invoice: participants, period, scope, type of course
• Attendance: an attendance record or certificate of attendance
• Outcome: a placement at the start and a progress report
• Employment law: where applicable, a repayment agreement, checked by an employment lawyer

What meaningful reports look like is shown in our article on language training reporting for HR.

How companies put tax-free language courses into practice

A clear process has proved its worth: define the needs for each role, assess employees’ levels, book the course through the company and document attendance and progress. That way, the business link is evidenced from the start, and payroll does not have to reconstruct anything after the event. You plan the budget based on format, group size and duration.

1. Needs analysis: which roles need which language at which level?
2. Placement: where are employees today? For larger teams, a language audit is a good fit. It is a paid service with no obligation to book a course afterwards, and an NDA is available on request.
3. Choose a format: one-to-one training for key roles, small groups of ideally four and at most six people for the broad base.
4. Contract and invoice: via the company, with the participants’ names.
5. Documentation: record attendance and progress regularly.

How to calculate the costs and justify them to management is described in planning your language training budget.

Our language courses for companies start with a needs analysis and do not end with the invoice: you receive placement results and progress reports that are directly suitable for your records. If you are planning language training for your team, the overview of our corporate language courses sets out all formats and processes.

Sources

1. lsth.bundesfinanzministerium.de: r 19 7
2. esth.bundesfinanzministerium.de: h 19 7
3. gesetze-im-internet.de
4. gesetze-im-internet.de: 42e

Frequently asked questions