Industry jargon not your thing? Our glossary will enlighten you!
An expense allowance is a lump-sum payment that is paid in connection with voluntary tasks or activities that are not defined in terms of time, location or content. However, as assignments in the modeling industry are usually contractually regulated anyway, expense allowances are paid for other expenses incurred in the course of an assignment.
What is meant by an expense allowance in purely legal terms is regulated in the German Federal Code. More precisely, Section 670 states: "If the agent incurs expenses for the purpose of executing the order which he may consider necessary under the circumstances, the client is obliged to reimburse these expenses."
The payment of an expense allowance is not uncommon in the fashion industry. This usually occurs not only, but primarily in the following situations:
Travel and accommodation costs: In the fashion industry, an expense allowance is paid out in the vast majority of cases if the model incurs additional expenses due to traveling to the shoot or staying overnight on location.
Fitting: Based on a prior agreement, an expense allowance is sometimes also paid for the fitting. The fitting is an appointment shortly before the actual job, during which the fit of the clothing on the model is checked. This includes not only the creations that are to be presented at a fashion show, but also costumes and outfits for video shoots, photo shoots or gala appearances.
Trade license: If models are not registered with an agency or are not self-employed, expense allowances are the most common form of general payment.
It is important to keep the relevant receipts - if available. This can be, for example, receipts for expenses, travel tickets or travel receipts.
German law stipulates that an expense allowance can only remain tax-free under one condition. This concerns the amount, i.e. the total of all expense allowances received.
Anyone who earns less than €3,000 per calendar year from expense allowances does not have to pay tax on this income. It only becomes taxable if it exceeds the upper limit of € 3,000. The amount of expense allowances received does not matter. It does not matter whether it is a one-off payment of €3,000 or whether the amount has been accumulated over several assignments. As soon as the limit is exceeded, the income must be taxed.
The independent tax processing of financial matters - including the receipt of expense allowances - is a delicate matter. That's why we at Jobwork have compiled all the relevant information you need to find your way around this field.
Yes, caps on expense allowances may be set, either by law or by internal guidelines of the paying organization.