No deduction prohibition: Expenses for a small aircraft used for business purposes

Oct 30, 2025

Contrary to the opinion of the tax authorities, the Münster Finance Court (FG) ruled that the
costs of a small aircraft used exclusively for business purposes may be tax-deductible as business expenses. The FG did not allow an appeal to the Federal Finance Court.

In the case in question, a limited liability company (GmbH) had purchased a small aircraft that was used exclusively for business trips. This incurred high costs. The aircraft was mainly used by the sole shareholder-managing director for business trips, but also by other employees in some cases. As the shareholder-managing director did not have a pilot's license, an external pilot was hired to fly the aircraft for every business trip on which it was used. The limited liability company also claimed the associated costs as business expenses.

The tax authorities considered the costs to be unreasonable entertainment expenses. In such a case, a deduction for business expenses is excluded. The tax office calculated fictitious alternative travel options, such as the use of a car with a chauffeur, taking into account hotel accommodation, and compared these with the actual costs incurred.

However, the FG did not agree with this, as the GmbH was able to plausibly demonstrate that the business appointments could be organized more efficiently by using the aircraft and that this enabled the managing director to attend more appointments with higher business value.

However, the FG did not agree with this, as the GmbH was able to plausibly demonstrate that the business appointments could be organized more efficiently by using the aircraft and that this enabled the managing director to attend more appointments with greater commercial success. Furthermore, it was possible to prove that the commercial success was significantly linked to the person of the managing director.