How do expenses work in Germany?

In general, all expenses that are directly related to the Client's business (travel costs or purchase of necessary work equipment) and therefore are in the in the Client's interest, can be refunded to the employee without causing wage tax.

When an employee incurs an expense outside of work and it's not directly related to the Client's business, the expense is subject to wage tax. Some examples include clothing, travel cases or fitness equipment or memberships in fitness clubs.

A tax free example is when workwear is given to all employees to ensure a consistent appearance and the workwear for example, has a logo of the company on it. In this case, it is unlikely that this will be used in private situations. Another tax-free example for workwear would be any kind of protective workwear that is common in certain jobs.