Which expenses are eligible?
Eligible expenses include gross wages or salary (for "mini-jobs") and the social security contributions paid by the employer, wage tax including the solidarity surcharge and church tax, accident insurance contributions, and levies under the Expense Reimbursement Act (U 1 and U 2).
(2023): Which expenses are eligible?
What regulations apply when married couples establish or end a joint household?
If two previously single taxpayers with their own households establish a joint household during the tax assessment period, or if the joint household of two taxpayers is dissolved during the tax assessment period and two separate households are established again, each taxpayer can claim the full maximum amounts in this tax assessment period, provided the other conditions are met.
This applies regardless of whether the marriage or civil partnership, separation, or divorce/dissolution of the civil partnership also takes place in the year the household is established or dissolved. In principle, each taxpayer can claim their actual expenses up to the maximum amount. It does not matter in which of the two households the expenses were incurred during this tax assessment period.
To claim the full maximum amount per taxpayer, it is essential that the respective taxpayer maintained a sole household for at least part of the tax assessment period.
If a joint household with another person is established immediately after dissolving a joint household, the taxpayer who lived in joint households throughout the year can only claim their actual expenses up to half of the maximum deduction amount.
The BMF letter dated 09.11.2016 explicitly regulates the increase in maximum amounts for single persons in the year of marriage.
(2023): What regulations apply when married couples establish or end a joint household?
What are household-related services?
Household-related service is a term from income tax law. The expenses for such a service can lead to a tax reduction. The legal basis can be found in § 35a EStG.
A distinction is made between household-related employment, household-related services, and craftsmen's services.
Depending on the classification of the service, different maximum amounts apply for consideration.
Household-related employment
Household-related employment exists when a person not belonging to the household carries out an activity in a private household that would usually be done by household members, such as shopping, cooking, baking, sewing, washing, cleaning, caring for children and the elderly, gardening.
Social security employment in a private household always exists if
- the wages from the employment exceed 520 Euro per month, or
- several mini-jobs together exceed the limit of 520 Euro per month.
Activities as a chauffeur, secretary, or companion are not eligible.
Household-related services
Household-related services must have been carried out by a self-employed service provider or a service agency. Eligible services include, for example:
- cleaning the apartment, cleaning windows, cleaning the stairwell and other communal areas,
- garden maintenance (e.g. mowing the lawn, trimming hedges),
- services for moves by private individuals (minus reimbursements from third parties).
Craftsmen's services
As part of craftsmen's services, all expenses for renovation, maintenance, and modernisation measures for the apartment used for own residential purposes (condominium, house, rented apartment) are eligible. These include, for example:
- work on interior and exterior walls,
- work on the roof, facade, garages, etc.,
- repairs or replacement work on windows and doors,
- painting, repairs, and replacement work on doors, windows (inside and outside), fitted cupboards, fitted kitchens, radiators and pipes,
- repairs and replacement work on floor coverings (e.g. carpet, parquet, tiles),
- repairs, maintenance, or replacement work on heating systems, electrical, gas, and water installations by electricians and plumbers,
- modernisation work in the bathroom,
- repairs and maintenance work on items in the taxpayer's household (e.g. washing machine, dishwasher, cooker, television, personal computer),
- garden design measures (e.g. paving work, new garden layout),
- paving work on the residential property,
- inspection work (e.g. chimney sweep, lightning protection, fire extinguishers and alarms).
(2023): What are household-related services?
How much tax can I save through household-related services and tradesmen's bills?
Depending on the type of employment and work, household-related services are subsidised differently in the tax return. The expenses can be taken into account for tax reduction as follows, depending on their type:
20 percent, maximum 510 Euro
- for household help in marginal employment (Minijob),
20 percent, maximum 4.000 Euro
- for household help in employment subject to social insurance,
- for care and support services (also in nursing homes)
- for household-related services in self-employment.
20 percent, maximum 1.200 Euro
- for craftsmen's services, but only wages and travel costs plus VAT, not material costs.
Your expenses for household help, household-related services and craftsmen's services are deducted directly from the tax liability at 20 percent.
If you pay no or very little income tax, unfortunately you have no possibility of tax reduction through household-related services or craftsmen's services.
The maximum amounts for the individual services are not reduced pro rata if the service is not provided for the whole year. For example, if you employed a cleaner for only a few months of the year, the wages paid will still be deducted from the tax liability at 20 percent, up to the maximum amount.
On the other hand, you cannot claim the expenses for household-related services more than once. Exception: You share the costs for the care of a person with others. However, you cannot claim double the maximum amount for two cleaners, even if you have several households in different flats.
The tax office counts several households in different flats as one household. If you and your spouse choose individual assessment, each partner is entitled to half the maximum amount for the respective household-related service. However, you can also apply for a different proportional allocation. Even if you are unmarried and living together, you can only claim half the maximum amount for yourself. In total, the maximum amount for the tax deduction is therefore only available once per household.
Mr Schmitt has his house renovated (cost: 6.000 Euro incl. VAT), employs a cleaner in marginal employment (4.800 Euro) and has a gardener (1.200 Euro incl. VAT) as well as a care service for his mother, who lives with him in the household (4.000 Euro incl. VAT). Through these expenses, Mr Schmitt saves income tax as follows:
- Deduction for renovation (20 percent of 6.000 Euro, max. 1.200 Euro): 1.200 Euro
- Deduction for cleaner (20 percent of 4.800 Euro, max. 510 Euro): + 510 Euro
- Deduction for gardener and care service (20 percent of 5.200 Euro, max. 4.000 Euro): + 1.040 Euro
Total tax deduction 2.750 Euro
This amount is deducted from the income tax. Mr Schmitt may receive a refund from the tax office if his advance wage or income tax payments are higher.
(2023): How much tax can I save through household-related services and tradesmen's bills?
Requirements for all tax reductions
The service must have been performed in the taxpayer's household. This condition is not met, for example, in the case of
- care and support for sick, elderly, and dependent persons in a day care facility,
- repair of household items at the repair company's premises,
- waste collection (the processing or disposal of waste takes place outside the household)
The household must be located in the European Union or the European Economic Area. If the taxpayer's expenses relate to multiple households (e.g. main residence and holiday home), the maximum amount is deductible only once in total.
Not eligible are expenses that have already been taken into account for tax reduction under other provisions of the Income Tax Act as business expenses, income-related expenses, special expenses, or extraordinary burdens.
Special feature for homeowners: Homeowners who use their own property receive the tax reduction even if the community or the administrator is the employer or client. This is done proportionally according to their co-ownership share.
The costs for waste collection cannot currently be considered as a household-related service in your tax return. This is based on a ruling by the Cologne Tax Court on 26 January 2011 (4 K 1483/10, EFG 2011 p. 978 no. 11).
The reason for this is that the main service is not provided within your property boundaries. The actual service is not the collection of the waste, but its subsequent disposal and processing. The emptying and transport of the waste are considered supporting activities. The Münster Tax Court recently confirmed this view (ruling of 24 February 2022, 6 K 1946/21 E). However, an appeal was rejected for procedural reasons, not on substantive grounds. This means that the issue has not yet been definitively clarified.
(2023): Requirements for all tax reductions
What evidence is required?
To receive the tax reduction, you must observe one condition:
You must obtain an invoice from the service provider as proof of expenditure, and you may only pay this invoice by bank transfer to their account. Ensure that the invoice separates labour and material costs. Only labour costs, as well as machine and travel costs including the VAT on them, are eligible for tax benefits. However, VAT does not need to be shown separately; you may add it to the labour costs.
It is not necessary to attach the bank statement to the tax return. However, in case of doubt, the tax officer may request it. Amounts paid by standing order, direct debit, or online banking are recognised in conjunction with the bank statement. Cash payments are not recognised.
The condition of bank transfer still applies. Invoices paid in cash will not be recognised.
Household-related services also include home care and support for persons in need of care by mobile care services or self-employed carers. Since 2009, it is no longer necessary to prove the need for care and a care level (until 2016) or a care grade (from 2017).
If you do not yet have a current service charge statement or a separate certificate according to § 35 a EStG for 2023 from your property management, this is not a problem. It is permissible to claim the total expenses for the tax year in which the statement is received by the tenant. You therefore take the most recent service charge statement you have – presumably from 2022 – and claim these costs in the tax year 2023. All tenants and property owners who have not yet received the current certificate according to § 35 a EStG for 2023 can proceed in this way!
All private individuals who have commissioned craftsmen or service providers claim the expenses in the tax year in which they paid the corresponding invoice themselves.
In 2019, the Federal Fiscal Court unfortunately ruled against the generous stance of the tax authorities that the tax reduction according to § 35a EStG is only granted for expenses incurred by a taxpayer for their own accommodation in a home or for their own care. However, the tax benefit is excluded for expenses incurred for another person, i.e. when children cover the costs for their parents (BFH ruling of 3.4.2019, VI R 19/17).
A few months after the BFH ruling, the Berlin-Brandenburg Fiscal Court also dealt with the assumption of care costs for a parent. This time, however, it was not about covering the costs for inpatient care, i.e. accommodation in a home, but about covering the costs for outpatient care. The FG ruled as follows: § 35a EStG favours - if at all - only expenses for the outpatient care of relatives in the taxpayer's own household (i.e. the carer's), not for the outpatient care of relatives in their household (BFH ruling of 11.12.2019, 3 K 3210/19). However, a revision was explicitly allowed at that time. And now the positive ruling of the BFH is available.
Currently, the Federal Fiscal Court has ruled as follows: The tax reduction according to § 35a para. 2 sentence 2 first half-sentence EStG can also be claimed by taxpayers who incur expenses for the outpatient care and support of a third party. Consequently, children can deduct the costs for outpatient care of their parents if they have borne the costs. This also applies if the care and support services are not provided in the taxpayer's own household but in the household of the person being cared for or supported (BFH ruling of 12.4.2022, VI R 2/20).
However, the BFH also complicates matters, as it upholds its above-mentioned ruling from 2019. It distinguishes between covering the costs for inpatient care (= still not deductible) and covering the costs for outpatient care (= deductible), where in the second case it depends on who concluded the care contract. Only if the payer, usually daughter or son, is contractually obliged, i.e. pays on their own debt, are the costs deductible. If, on the other hand, payment is made on the debt of the person being cared for, i.e. father or mother, because they concluded the care contract, it is a tax-irrelevant third-party expense.
(2023): What evidence is required?
