Caution: Household services are not always deductible

Costs that you have already declared as income-related expenses, business expenses, special expenses, or extraordinary expenses in your tax return cannot also be deducted as household-related services.

You cannot choose how to deduct the costs. If the costs are considered income-related expenses or special expenses, they must be declared as such, the same applies to extraordinary expenses. This applies, for example, to childcare costs, which cannot be deducted as household-related services, even if the maximum amount for childcare costs has already been exceeded.

Also, personal services, such as for a hairdresser or cosmetic treatment, are not considered household-related services, even if they take place in your home.

Services listed in the care insurance service catalogue can, however, be declared.

Not eligible are works that are not carried out in your private household, for example, if you take your laundry to a dry cleaner.

Craftsman services for which you receive insurance benefits after a claim (e.g. household or building insurance) cannot be claimed in the tax return. Insurance benefits that you will receive later must also be included.

There is also no tax deduction for household-related services that do not take place in your private household. This includes, for example, the cleaning of an off-site office, a second home, or your company. Such expenses are considered business expenses or income-related expenses. However, costs for a cleaner who works both in a home office and in your private home can be apportioned on a time basis. The business part is considered business expenses or income-related expenses, the private part as household-related services.

If household-related services are carried out both on private property and on public land, this activity is fully tax-privileged according to a BFH ruling. This applies, for example, to snow clearing on public pavements, but not on public roads. The costs for winter services in front of your own property can therefore be deducted from the tax liability at 20 percent (BFH ruling of 20.3.2014, VI R 55/12).

However, in 2020 the BFH ruled that expenses for street cleaning in front of the property are not tax-privileged as household-related services according to § 35a para. 2 sentence 1 EStG (BFH ruling of 13.5.2020, VI R 4/18).

Recently, the Federal Ministry of Finance published the following overview on the BFH's case law (BMF letter of 1.9.2021, IV C 8 - S 2296-b/21/10002 :001):

In addition, the BMF stipulates: For craftsmen's services provided by public authorities, which benefit not only individual households but all households involved in the public measures, a benefit under § 35a EStG is excluded. In this respect, there is no spatial-functional connection between the craftsmen's services and the household of the individual property owner. This applies, for example, to the expansion of the general supply network or the development of a road. This position corresponds to the BFH ruling of 28.4.2020 (VI R 50/17).

(2023): Caution: Household services are not always deductible

Can I also claim the tax reduction as a tenant?

Yes, because you do not need to own the flat to claim the expenses.

Taxpayers who wish to claim tax reductions for household-related services or tradesmen's services do not need to be the client of the measure carried out. Therefore, tenants can also claim costs for services commissioned by the landlord and paid by them as part of the service charges.

If the landlord has commissioned household-related services and tradesmen's services, tenants can claim the amounts paid for service charges as tax-reducing, also within the specified maximum amounts.

With the service charge statement for the flat, you can save a lot of tax, as many items can reduce the tax burden as household-related services or tradesmen's services. For service charges, this mainly concerns the items

• Garden maintenance
• House cleaning
• Caretaker activities
• Chimney sweep fees
• Lift maintenance.

To claim their entitlement with the tax office, the tenant needs a certificate from the landlord containing the required information. The "normal" service charge statement usually does not contain the necessary information. The tenant is entitled to receive a corresponding certificate.

Note: If you are renting, you can also claim tax benefits for household-related employment or tradesmen's services if these were commissioned by you and carried out in your flat.

The Federal Fiscal Court recently confirmed that tenants can claim expenses for household-related services and tradesmen's services in accordance with § 35a EStG to reduce tax, even if they have not personally concluded the contracts (BFH ruling of 20.4.2023, VI R 24/20). In the event that the tax office requests proof, it is advisable to request a certificate from the landlord in accordance with Appendix 2 of the BMF letter dated 9.11.2016.

If the landlord refuses to provide the certificate or requests additional proof, such as copies of tradesmen's invoices, reference can be made to the right to inspect documents, which exists according to § 259 para. 1 BGB in accordance with the established case law of the Federal Court of Justice. The tenant can inspect, photograph, scan or copy the documents. For price-controlled residential tenancies, § 29 para. 2 sentence 1 of the Regulation on the Determination of the Permissible Rent for Price-Controlled Dwellings even allows copies to be made against reimbursement of costs (BGH ruling of 8.3.2006, VIII ZR 78/05).

(2023): Can I also claim the tax reduction as a tenant?

How are home office costs taken into account for tax purposes when shared?

When sharing a home office, for example between spouses, the following rules apply:

• The conditions for deducting home office expenses are checked individually (BFH rulings of 15.12.2016, VI R 53/12 and VI R 86/13).
• If the conditions are met, each user who uses the home office as their main place of work can deduct the costs they have incurred.
• Property-related costs (e.g., depreciation, interest on loans) are deductible if they are owed by the user (BFH ruling of 6.12.2017, VI R 41/15).
• Rental costs for jointly rented rooms are also deductible, regardless of the type of partnership.
• Usage-related expenses (e.g., energy and cleaning) are fully deductible if they relate to the use of the home office (BMF letter of 15.8.2023, IV C 6 - S 2145/19/10006 :027).

Example 1: A and B use a home office equally. The total expenses amount to 4.000 Euro and are jointly borne by A and B. A uses it as their main place of work. A can deduct 2.000 Euro as business expenses. B can only claim the daily allowances of 6 Euro per day if they worked from home on those days.

Example 2a: A and B jointly use a home office in the apartment rented by B. The expenses amount to 3.000 Euro for rent and 1.000 Euro usage-related expenses. A uses it as their main place of work. A can only deduct 500 Euro (= half of the usage-related expenses). The rental expenses are attributed to B as property-related expenses because B is contractually liable for the rent. B can therefore only claim the daily allowances.

Example 2b: If, on the other hand, A pays the rent, the property-related expenses of 1.500 Euro are also deductible by A.

Example 3: A and B jointly use a home office, which is the main place of business and professional activity for both throughout the calendar year. They waive the calculation of the expenses incurred and can each deduct the annual allowance of 1.260 Euro as business expenses or income-related expenses.

(2023): How are home office costs taken into account for tax purposes when shared?

Pet care is also eligible as a household-related service!

Expenses for household-related services can be deducted directly from the tax liability at 20%, up to a maximum of 4,000 Euro per year (§ 35a para. 2 EStG). Eligible services include the care and support of persons in need of care by outpatient care services or self-employed carers, as well as childcare by self-employed childminders or au pairs in the client's household.

The question is whether pet care is considered a household-related service and whether the corresponding costs are tax-deductible. In any case, the tax authorities clearly reject the tax benefit. The new BMF decree from 2014 states that pet care, grooming, and veterinary costs are not tax-privileged (BMF letter dated 10.1.2014, BStBl. 2014 I p. 75, Annex 1).

Currently, the Federal Fiscal Court has ruled against the tax authorities, stating that the care and supervision of a pet is a household-related service, as pet care has a close connection to the household management of the owner. Therefore, the expenses for this are tax-privileged according to § 35a EStG (BFH ruling of 3.9.2015, VI R 13/15).

The case: The couple keep a house cat in their flat. During their absence, they hired a pet and house sitter, who charged them 12 Euro per day, totalling 302.90 Euro for the year. The tax office rejected a tax reduction, referring to the above-mentioned BMF letter.

According to the BFH judges, "household-related services" include household tasks that are usually carried out by members of the private household or employed persons and occur at regular intervals. Thus, the care and supervision of a pet taken into the household is a household-related service. "Activities such as feeding, grooming, walking, and other activities related to the pet, or cleaning work required in connection with the pet, occur regularly and are typically carried out by the taxpayer themselves or other household members." These are therefore part of the owner's household management.

However, the costs for pet care and supervision - including travel costs - are only deductible if the care takes place in the household or on the property. The tax benefit is not available if the pet is picked up from the flat and returned after care (e.g. dog walkers) (see FG Münster of 25.5.2012, 14 K 2289/11).

However, the BFH has now clarified that at least "walking" the pet outside the home is not detrimental to the tax benefit. After all, the tax authorities also grant the tax bonus for "accompanying children, sick, elderly or dependent persons on shopping trips and visits to the doctor, as well as for small errands" by a domestic help outside the home (BMF letter dated 10.1.2014, BStBl. 2014 I p. 75, para. 13).

Recently, the Berlin-Brandenburg Fiscal Court confirmed the negative view on all-day dog care services (dog sitters) (judgment of 7.11.2018, 7 K 7101/16). In this case, the dog sitter picked up the plaintiffs' dog daily from their home for a walk with other dogs. In the afternoon, the dog was returned to the plaintiffs' home. In between, the dog was driven around in the car or cared for on the dog sitter's premises. This arrangement of dog care is no longer comparable to dog care provided by household members. Household members would not leave the home with a dog for a walk and only return in the afternoon.

(2023): Pet care is also eligible as a household-related service!

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?

Is a shared workspace a sufficient other workplace?

Taxpayers can deduct a flat rate of 6 Euro for each day on which the business or professional activity is carried out "predominantly" at home and the primary workplace is not visited. The daily allowance is also referred to as the home office allowance or homework allowance.

This applies to all employees and self-employed individuals who, like during the Corona years, occasionally work from home but have their "actual" workplace with a desk at the office or company. The deduction of the home office allowance is limited to a maximum of 1,260 Euro per year (210 days x 6 Euro).

It does not matter whether a separate study is available. A work corner is sufficient. A deduction for travel expenses alongside the home office allowance is not permitted if you work partly at home and partly at your employer's office or premises on the same day and travel costs are incurred.

A parallel deduction of travel expenses and the daily allowance is exceptionally possible only if a business trip is undertaken on a home office day.

If no other workplace is permanently available for business and professional activities, home office costs can be deducted with a daily allowance of 6 Euro per day, up to a maximum of 1,260 Euro per year.

This applies, for example, to many teachers whose main place of work is the school, but who do not have a desk there for lesson preparation and follow-up.

Important: In this case, in addition to the daily allowance, travel costs to the school, office, or company can also be deducted using the travel allowance. It no longer matters whether a separate study is available. A work corner is sufficient; if necessary, it can even be the kitchen table. This is a real simplification compared to the previous regulation.

But what is an "other workplace" and in which cases is it "not permanently available"? The following applies:

• An "other workplace" is generally any workplace suitable for carrying out office work. No further requirements are placed on the nature of the workplace.
• Another workplace is available if you can actually use it to the extent and in the manner specifically required.

The Federal Fiscal Court has ruled that a pool workplace is generally an "other workplace", but only if the employee can actually use it to the extent and in the manner specifically required. There must be a sufficient number of pool workplaces available.

Conclusion: If you have a pool workplace, a deduction of the daily allowance is usually only permissible for days on which you do not visit the (primary) business location or primary workplace and work predominantly at home.

(2023): Is a shared workspace a sufficient other workplace?

Which measures are subsidised and what is the amount of the tax reduction?

As part of household-related services, the work must have been carried out by a self-employed service provider or service agency. Eligible services include, for example:

• cleaning the flat, window cleaning, cleaning the stairwell and other communal areas,
• garden maintenance (e.g. mowing the lawn, trimming hedges),
• services for private moves (minus reimbursements from third parties).

An exemplary list of eligible and non-eligible household-related services and tradesmen's services can also be found in the BMF letter dated 11.09.2016.

The expenses for household-related services provided by self-employed service providers are directly deductible from the tax liability, up to 20,000 Euro at 20 percent, maximum 4,000 Euro per year.

As a rule, a prerequisite for the deduction of costs is that they are related to your own household. However, various activities are carried out both on private property and on public land, or they benefit the private household at least indirectly, even if they primarily concern the public area. These include, for example, pavement cleaning or snow clearing.

• In 2014, the Federal Fiscal Court ruled that snow clearing on public pavements is considered a privileged household-related activity. The costs for winter services in front of your own property are therefore deductible at 20 percent from the tax liability (BFH ruling of 20.3.2014, VI R 55/12). According to the BFH judges, services are related to the household if they are provided "in the spatial area of the existing household". This includes the flat as well as the associated land. Therefore, the term "household" is to be interpreted spatially-functionally.
• In 2020, however, the BFH ruled that expenses for street cleaning in front of the property are not tax-privileged as household-related services according to § 35a para. 2 sentence 1 EStG (BFH ruling of 13.5.2020, VI R 4/18).
• Currently, the Federal Ministry of Finance has published the following brief overview in line with the BFH (BMF letter dated 1.9.2021, IV C 8 - S 2296-b/21/10002 :001):

As a rule, a prerequisite for the deduction of costs is that they are related to your own household. However, various activities are carried out both on private property and on public land, or they benefit the private household at least indirectly, even if they primarily concern the public area. These include, for example, pavement cleaning or snow clearing.

• In 2014, the Federal Fiscal Court ruled that snow clearing on public pavements is considered a privileged household-related activity. The costs for winter services in front of your own property are therefore deductible at 20 percent from the tax liability (BFH ruling of 20.3.2014, VI R 55/12). According to the BFH judges, services are related to the household if they are provided "in the spatial area of the existing household". This includes the flat as well as the associated land. Therefore, the term "household" is to be interpreted spatially-functionally.
• In 2020, however, the BFH ruled that expenses for street cleaning in front of the property are not tax-privileged as household-related services according to § 35a para. 2 sentence 1 EStG (BFH ruling of 13.5.2020, VI R 4/18).
• Currently, the Federal Ministry of Finance has published the following brief overview in line with the BFH (BMF letter dated 1.9.2021, IV C 8 - S 2296-b/21/10002 :001):

(2023): Which measures are subsidised and what is the amount of the tax reduction?

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?

Current decisions

Waste collection costs in the tax return

The costs for waste collection are currently not deductible 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).

Why are waste collection costs not deductible?

The reason 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.

Current developments and tradesmen's services

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 is still not definitively resolved.

In addition, the Federal Fiscal Court has recently ruled that the tax reduction for tradesmen's services can also be claimed if, for example, the son lives rent-free in his mother's house, commissioned the tradesmen's work and also paid for it. The claim for the tax reduction for tradesmen's services under § 35a (3) EStG does not require any special right of use by the taxpayer in addition to the actual running of a household. The taxpayer can also run a household in rent-free premises (BFH ruling of 20.4.2023, VI R 23/21).

Emergency call systems and tax relief

What about emergency call systems? Costs for an emergency call system are only deductible if the on-call service is provided as part of "assisted living" in a retirement home. In this case, 20 percent of the costs can be deducted directly from the tax liability. Outside of "assisted living", these costs are not tax-privileged, as confirmed by the Federal Fiscal Court.

A pensioner with an emergency call system in her own household did not have the costs recognised by the tax office because the service was not provided in the pensioner's household.

Tax benefits for tenants

Tenants can also receive tax benefits under § 35a EStG if they have used the relevant services and can prove this with a certificate from the landlord or manager. This also applies if the tenant has not concluded the contracts themselves.

The Federal Fiscal Court ruling confirms that tenants can claim expenses for household-related services and tradesmen's services if the required information is included in statements or certificates. It is advisable to request a corresponding certificate from the landlord or manager to avoid possible disputes. The template for the certificate is included in the BMF letter of 9.11.2016.

Tax relief for structural engineering services

The Federal Fiscal Court has denied the tax relief under § 35a EStG for structural calculations by an engineer. This applies even if the structural calculation was necessary for the execution of a tradesman's service (BFH ruling of 4.11.2021, VI R 29/19).

(2023): Current decisions

If you use the home office for two types of income!

The allocation of expenses for the home office or the annual allowance across different activities is permitted if you have multiple concurrent occupations and the home office is the central hub for all activities. If the central point of some activities is outside the home office, you can deduct the costs proportionally for these activities.

However, it is also possible to allocate all expenses to a single activity if you prefer not to make a detailed allocation. Please note that the annual allowance is not increased based on the number of activities carried out in the home office.

For example: If you use your home office 60% for an employed activity and 40% for a commercial side activity, and the centre of all your professional activities is in the home office, you can allocate the annual allowance accordingly. In this case, 60% (756 Euro) would be deducted as income-related expenses and 40% (504 Euro) as business expenses. You also have the option to apply the entire annual allowance to one of the two activities to simplify the process.

(2023): If you use the home office for two types of income!

What is the tax reduction?

If the domestic help is employed in a regular employment relationship and you pay normal contributions to statutory social insurance, you are entitled to a very high tax reduction.

Expenses are deductible from the tax liability up to 20.000 Euro at 20 percent, maximum 4.000 Euro per year.

If the employment relationship does not exist for the entire year, the maximum amount of 4.000 Euro is not reduced by one twelfth for each full calendar month in which the conditions are not met.

(2023): What is the tax reduction?

Home office costs: Double maximum amount for two people?

As of 1 January 2023, the tax treatment of "home office" and "homework" has been redefined.

There are two scenarios (§ 4 para. 5 no. 6b and 6c EStG, amended by the "Annual Tax Act 2022" of 16 December 2022; BMF letter of 15 August 2023, IV C 6-S 2145/19/10006):

1. The home office is the "centre" of all business and professional activities:
   • The annual allowance of 1,260 Euro is a flat rate for expenses in the home office.
   • The option to deduct the annual allowance can only be exercised uniformly for the entire year.
   • The annual allowance is personal and cannot be claimed multiple times for different activities.
   • The daily allowance (6 Euro per day) cannot be deducted for the same period.
   • Special regulations apply for home offices shared by spouses or partners.
2. Professional activity at home, but not the centre:
   • The home office allowance is 6 Euro per day for a maximum of 210 days, totalling 1,260 Euro per year.
   • The workplace in the home does not have to meet any specific requirements.
   • The daily allowance can be split between different activities or allocated entirely to one activity, but cannot be deducted multiple times.
   • In the case of a second household or deduction of costs for a home office, the daily allowance cannot be additionally deducted.
   • The daily allowance is offset against the employee allowance of 1,230 Euro and requires a tax saving of over 1,230 Euro.
   • Record-keeping requirement: The calendar days on which the conditions for claiming the daily allowance are met must be recorded by the taxpayer and credibly documented in an appropriate form.

(2023): Home office costs: Double maximum amount for two people?

Are the costs for waste collection also included in the eligible expenses?

Although the waste is generated in the household and collected from there, the actual service of the waste collection is not the emptying of the bins, but the transport and disposal or recycling of the waste.

This takes place outside the household of the taxpayer and is therefore not eligible.

The Münster Finance Court recently confirmed this view (judgment of 24.2.2022, 6 K 1946/21 E). The appeal against this decision was dismissed - however, for procedural reasons and not on substantive grounds. So the matter is still not completely resolved.

(2023): Are the costs for waste collection also included in the eligible expenses?

Can I deduct the costs for a tradesperson in addition to the costs for my cleaner?

Yes. You can claim the invoice for craftsmen's services (wages) and the wages for your domestic help simultaneously in the tax return. In addition to the wages for domestic help, you can also deduct the wages for craftsmen up to 6,000 Euro at 20 percent, a maximum of 1,200 Euro per year, directly from the tax liability.

Tax benefits apply not only to regular renovation work but also to one-off maintenance and modernisation measures - and not just in the home, but also on the property. The benefits apply not only to work that could usually be done by household members but also to work that can only be carried out by professionals, e.g. repairing a washing machine. The important thing is that the repair of the machine takes place in your household.

(2023): Can I deduct the costs for a tradesperson in addition to the costs for my cleaner?

What is the difference between employment and services?

A household-based employment relationship exists if you or the homeowners' association have employed someone to carry out household-related activities for the homeowners' association. The homeowners' association is the employer of this person.

A household-based service exists if household-related activities are carried out by a company. The homeowners' association is the client of the service.

(2023): What is the difference between employment and services?

When is employment in a private household subject to social insurance contributions?

There can be various reasons for employment subject to social insurance contributions for a domestic help:

1. Wages over 520 Euro/month
2. Multiple mini-jobs with total wages over 450 Euro/month or 520 Euro/month (from 1.10.2022).

In principle, there are no special features for the taxation and social contributions of household-related wages. As in the commercial sector, the employer must withhold income tax according to the employee's electronic income tax deduction characteristics (ELStAM) and pay it to the tax office.

If you employ a domestic help subject to social insurance contributions or a self-employed service provider, you can claim 20 percent of the costs, up to a maximum of 4.000 Euro per year. This also applies to care and support services for a dependent relative.

If you have registered a domestic help subject to social insurance contributions, the tax office will deduct 20 percent from the tax liability from the expenditure of 12.000 Euro per year, i.e. 2.400 Euro.

(2023): When is employment in a private household subject to social insurance contributions?

What additional levies are incurred on top of earnings?

For a household help in minor employment, the employer must pay a flat rate of 12% on the wages, consisting of 5% each for statutory pension and health insurance, and 2% for tax. Additionally, the following contributions are payable in 2019:

• U1 levy for sickness and convalescence expenses: 1.1%
• U2 levy for maternity expenses: 0.24%
• Contribution to statutory accident insurance of 1.6% of wages.
• Private households do not have to pay the U3 levy for insolvency payments.

For household employees in minor employment, the private employer must use the so-called household cheque. The household cheque offers you significant relief - which you must take advantage of! And only by using the household cheque procedure can you benefit from the tax reduction under § 35a EStG. With the household cheque, you can easily register your household help in minor employment with the Minijob Centre (Deutsche Rentenversicherung Knappschaft-Bahn-See) and at the same time grant a direct debit authorisation for the deduction of social contributions.

The Minijob Centre will issue an employer's business number if not already available, calculate the additional costs (flat rate, levies, accident insurance) and debit the total amount from your account twice a year by direct debit: for the first half of the year on 31 July and for the second half of the year on 31 January of the following year.

(2023): What additional levies are incurred on top of earnings?

Household-related services: Are costs for emergency call systems tax-privileged?

Expenses for a home emergency call system may be tax-deductible, depending on the circumstances:

1. As part of "assisted living" in a retirement home, the costs for a home emergency call system are tax-privileged. You can deduct 20 percent from the tax liability. This is in accordance with the Federal Fiscal Court (BFH) ruling of 3.9.2015 (VI R 18/14).

2. If the home emergency call system is used outside of "assisted living" in a retirement home, for example in your own flat, the costs are not tax-privileged.

3. The Federal Fiscal Court (BFH) recently ruled in favour of the tax authorities regarding the second case: Expenses for a home emergency call system that merely establishes contact with a service centre (on-call service) are not tax-privileged as household-related services if the service is provided outside the client's household. This is according to the BFH ruling of 15.2.2023 (VI R 7/21).

The main service of a basic home emergency call system is processing alarms and notifying contacts, the family doctor, care service, etc. by phone, not the pensioner calling the emergency service themselves. Since this key service is not provided in the pensioner's household, it is not tax-privileged.

(2023): Household-related services: Are costs for emergency call systems tax-privileged?

Tax bonus for locksmith services?

The front door clicks shut behind you – and suddenly you're standing outside without a key. You need a locksmith. Unscrupulous companies exploit the emergency and demand exorbitant amounts. The question is whether at least the tax office provides some relief. Are these household-related services, which can be deducted directly from the tax liability at 20%, up to a maximum of 4,000 Euro per year (§ 35a para. 2 EStG)?

Currently, the Federal Government, represented by Parliamentary State Secretary Dr Meister, states that expenses for a locksmith to open the front door may be eligible for tax relief as a household-related service. This "depends on the specific service provided in each individual case. The term 'in the household' should be interpreted spatially-functionally" (BT-Drucksache 18/11220 of 17.2.2017, Question 19). The question was clear and simple, but the answer is unclear and convoluted. It is undisputed that the locksmith's service is provided in the spatial area of the household, which is defined by the property boundaries. This includes the front door or apartment door.

It would have been more helpful if Dr Meister had pointed out a problem: The tax benefit is only available if an invoice is issued and paid by bank transfer. That's the theory. But in practice, locksmiths usually want immediate payment, preferably in cash. You might even be lucky if the locksmith at least provides a receipt (but cash receipts are not accepted by the tax office!). It's better to be persistent and insist on a bank transfer. You can also offer the locksmith an immediate transfer via online banking – once you're back in the flat.

(2023): Tax bonus for locksmith services?