Whether cleaning lady or caretaker – if you employ someone in your private household to help you, you can look forward to tax reductions.
Household services can be tax-deductible to a certain extent since this help is an important relief for many workers in Germany. But what exactly is meant by household-related services? Below are practical tips to help you with your 2021 taxes.
- Household services and taxes in Germany
- You must take note of this
- From apartment cleaning to handyman services
- Taking care of children and pets
- Other examples: You can deduct all of this from your taxes
- How much is the tax credit for household services?
- Always pay attention to the proof of household-related services
- You should also know these about household services
- Prohibition of double deduction
Household services and taxes in Germany
If someone does work for you in your private household, you can usually enter 20 percent of each bill in your tax return. However, you may only claim a maximum of 4,000 euros per year for tax purposes as household-related services.
It gets a bit more complicated if, for example, you employ your cleaning staff as a mini-jobber. Here, too, the state grants a tax break of 20 percent. However, the tax savings are limited to 510 euros per year if you hire a mini-jobber.
The following household services in your home in Germany qualify for a tax reduction:
The following works are examples of household-related services:
- cleaning apartment
- clean windows
- clean carpet
- prepare meals
- to iron laundry
- Repair damage to the house and garden
- Garden maintenance (mowing the lawn, trimming hedges, weeding, felling trees)
- winter service
- Support, care or nursing of sick or elderly people (outpatient care services, manicure and pedicure services, flat rate care for assisted living )
- Care of children in their own household (by a self-employed childminder or an au pair )
- Looking after and caring for pets on your own property
Where are household-related services listed?
Gather all bills and related statements throughout the year and report your expenses for household-related services in the Household-related expenses appendix.
You must take note of this
First you need an invoice for the services rendered. In this, your service provider must have broken down the individual items precisely, because you can only claim the following expenses for tax purposes:
- Labor costs (incl. VAT)
- ride costs
- Machine expenses
- disposal costs
- Costs for consumables (e.g. cleaning agents, grit)
However, you may not enter in your tax return:
- material costs
- Administrator fees in a condominium association
- garbage collection fees
- costs for the delivery of goods
Important: Remember to pay the bill by bank transfer. The tax office does not accept cash payments.
Confirm the household services with your tax advisor
In general, a tax advisor can best assess when and with what evidence a household service can be claimed for tax purposes in individual cases. In any case, to submit such a service, it should be possible to provide written records and accounts. It is not possible under any circumstances to settle undeclared employment relationships or even individual cash payments for favors.
From apartment cleaning to handyman services
The individual points of household-related services are defined in Section 35a of the Income Tax Act (EStG). In it, the state grants a reduction in income tax for certain service sectors.
- This includes the cleaning of living spaces and outbuildings, including window cleaning and garden maintenance.
- It doesn’t matter whether a domestic help is hired on the basis of a marginal employment relationship, an employment subject to social security contributions such as a full-time domestic help, or the service is provided by a self-employed entrepreneur or an agency.
- It is important, however, that these are purely living spaces and their annexes. If, for example, a room is used as an office or law firm, the services for this room are operating expenses and are not covered by the regulation.
Taking care of children and pets
Other services within this scheme also include looking after children and pets, placing relatives in a nursing or retirement home, and home care and support services. For several years, the above paragraph has been expanded again.
In the meantime, household-related craft services are also covered by the tax reduction. This includes the entire range of repairs and maintenance on houses and apartments, including street cleaning on the property and on-site repairs of household appliances or systems.
Other examples: You can deduct all of this from your taxes
There are numerous services that are tax deductible. If you are not sure what all counts as household-related services, we have the following examples:
- Chimney sweep, gutter cleaning, patio roofing
- Install, maintain and repair underfloor heating
- Install, maintain and repair fiber optic network on your own premises
- Snow removal – but only if you are obliged to do so
- Material costs are not deductible, but consumables are. Materials that you regularly buy for a household help (e.g. cleaning agents, cleaning fumes) are tax deductible. (Vacuum cleaners, brooms, cleaning buckets do not count.)
- You cannot deduct the cost of garbage disposal. However, if waste is generated as part of a service and this is disposed of by the service provider, these additional costs can be deducted.
How much is the tax credit for household services?
The tax credit for household services is granted on income tax. This also means that only people who actually pay income tax or who can receive repayments from withheld wage and church tax or the solidarity surcharge benefit from this.
- In the case of households, 20 percent of the wage costs or billing costs of self-employed service providers are deducted directly from the tax burden. It is therefore a direct tax reduction. However, the maximum value is limited to 4,000 euros per year.
- For household craftsman services, the value is even lower. Indeed, 20 percent of the wage or billing costs are also deducted from the tax burden. However, this only applies up to an amount of up to 1,200 euros per year.
- If you hire a mini-jobber to do the work, the 20 percent also applies here – however, the maximum amount here is 510 euros per year.
Always pay attention to the proof of household-related services
Expenses will only be reimbursed upon application. That means they should be listed on the annual tax return. However, a separate application is not necessary. Like all relevant expenses, payments for household-related services must also be documented and traceable.
- Verbal employment contracts or tradesman orders by handshake with cash payment, for example, cannot be settled. The contractually bound household help or mini-jobber must also be paid by bank transfer so that the expense can be recognized by the tax office.
- If the service is provided by a company, you should not only insist on an invoice, but also submit the transfer slip with your tax return.
- Also make sure that all costs are listed individually on the invoice. You can deduct labor costs, machine hire costs and even travel expenses, but not material costs. There is one exception: if the materials are used for energy-efficient construction and renovation.
You should also know these about household services
When preparing your tax return, you should also consider the following:
- In order for you to be able to deduct the costs for the services from your taxes, your household must be in Germany, the European Union or the European Economic Area.
- If you actually use them yourself, there is also a tax advantage for household-related services relating to second homes, weekend homes and holiday homes.
- The expenses are only deductible in the year in which you settle them. So if a service was performed in 2021 but you only pay the bill in 2022, you can only deduct the amount in the tax return for 2022.
- If certain work has been done by relatives living in the same household (eg the spouse), this does not count as household services.
Prohibition of double deduction
Expenses that have been claimed as household-related services cannot, of course, appear again elsewhere in the tax return.
- Above all, the self-employed, freelancers, or landlords should check with their tax advisor whether it is a household-related service or perhaps an operating expense or other expense.
- Furthermore, you should know that the services can only be sold once per household; the maximum amounts apply per household and not per person. This means that even if several single people live in a household, they may not all request the maximum amount separately.