Can I also claim the tax reduction as a tenant?

Yes, because you do not need to be the owner of the flat to claim the expenses.

Taxpayers who wish to claim tax reductions for household 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 services and tradesmen's services, tenants can claim the amounts paid for service charges as tax reductions, also within the specified maximum amounts.

With the service charge statement for the flat, you can save a significant amount of tax, as many items can reduce the tax burden as household 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 the tax benefit at the tax office, the tenant needs a certificate from the landlord containing the relevant details. The usual service charge statement is generally not sufficient for this. However, tenants have a legal right to such a certificate.

Note: If you are renting, you can also claim tax benefits for household employment or tradesmen's services if you have commissioned them yourself and they were carried out in your flat.

The Federal Fiscal Court (BFH) recently clarified that tenants can claim expenses for household services and tradesmen's services in accordance with § 35a EStG for tax purposes, even if they have not concluded the contracts themselves (BFH ruling of 20.04.2023, VI R 24/20). If the tax office requests corresponding 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 issue the certificate or requests additional proof, such as tradesmen's invoices, the tenant can invoke their right to inspect documents in accordance with § 259 (1) BGB. According to the constant case law of the Federal Court of Justice, the tenant is allowed to inspect, photograph, scan or copy the documents. For price-controlled housing, § 29 (2) sentence 1 of the Regulation on the Determination of the Permissible Rent even permits the making of copies against reimbursement of costs (BGH ruling of 8.3.2006, VIII ZR 78/05).

Can I also claim the tax reduction as a tenant?

Work carried out in the workshop of the craft business is not eligible.

Expenses for craftsmen's services are deductible from the tax liability at 20%, up to a maximum of 1,200 Euro per year. Only labour costs are eligible, and only for work on and in the self-used property. For a long time, it was unclear to what extent work carried out in the workshop of the craftsman's business was also eligible.

The Federal Fiscal Court has now decided the matter: If work is carried out in a craftsman's workshop, the associated labour costs are not eligible for relief under § 35a (3) EStG (BFH rulings of 13.5.2020, VI R 4/18 and VI R 7/18).

According to the BFH, services provided outside the household are not eligible, even if they are provided for the household. What matters is where the service is actually performed. A craftsman's service carried out in the craftsman's workshop on a household item does not have a (direct) spatial connection with the household for which it is provided, but only a functional one. Whether the service result is achieved in the household is therefore generally irrelevant. The spatial-functional connection to the household cannot be established solely by the fact that the craftsman's service relates to a household item.

The first case concerned the repair of a courtyard gate, which was removed by the carpenter, repaired in his workshop, and then reinstalled. A tax reduction for the repair of the courtyard gate is only possible to the extent that the carpenter carried out the work on the property and not in his workshop (VI R 4/18).

The second case involved the manufacture, galvanisation, delivery, and installation of a door (workshop and installation work). There is no tax relief for the manufacture and galvanisation of the door in the workshop, only proportionately for the installation work in the household (VI R 7/18).

Ensure that the labour costs for the on-site service (installation) are itemised separately on the invoice. However, even if this is not the case, the labour costs can be apportioned on an estimated basis. According to the BFH, "it is actually possible to split the labour costs into a non-eligible 'workshop wage' and an eligible 'on-site wage'. Such a split does not contradict the legislative intent to combat undeclared work" (VI R 4/18, VI R 7/18).

Work carried out in the workshop of the craft business is not eligible.

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).

Which expenses are eligible?

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.

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

What evidence is required for tax reduction under section 35a of the Income Tax Act?

To claim the tax reduction under § 35a EStG (household services, craftsmen's services and care expenses), certain conditions and evidence must be met.

1. Invoices and proof of payment

The service provider must issue a proper invoice, with labour and material costs listed separately. Only labour, machine and travel costs, and the VAT on these, are eligible. Payment must be made by bank transfer; cash payments are not recognised.

2. Household services and care expenses

Household services include not only traditional tasks such as cleaning or gardening but also home care for people in need of care. Since 2009, no proof of the care level is required.

3. Missing service charge statement

If you have not yet received the service charge statement for the current tax year, you can submit the previous year's statement. The year the statement is received counts.

4. Court rulings on care costs

BFH ruling of 3 April 2019 (residential care not deductible, ref.: VI R 19/17)

The Federal Fiscal Court ruled in 2019 that only costs for one's own care or accommodation in a home are deductible. If children cover the costs for their parents' residential care, this is not tax-deductible.

Ruling of the Berlin-Brandenburg Fiscal Court of 11 December 2019 (outpatient care deductible, ref.: 3 K 3210/19)

The Berlin-Brandenburg Fiscal Court ruled that costs for outpatient care of relatives are deductible if the care takes place in the taxpayer's household.

BFH ruling of 12 April 2022 (outpatient care deductible, residential care still not deductible, ref.: VI R 2/20)

The BFH ruled in 2022 that outpatient care in the parents' household is also deductible if the child is contractually obliged. Costs for residential care remain non-deductible for tax purposes.

What evidence is required for tax reduction under section 35a of the Income Tax Act?

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 several 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 Fiscal 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 Fiscal 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.

Requirements for all tax reductions

Which measures are subsidised as craftsmen's services and what is the tax reduction?

As part of the tax incentives under § 35a EStG, certain tradesmen's services for renovation, maintenance, and modernisation measures in a self-used flat or house can be tax-deductible. The subsidised measures include, for example:

Examples of subsidised tradesmen's services

• Work on interior and exterior walls (e.g. painting or wallpapering)
• Work on the roof, facade, and garages (repairs, modernisations, maintenance)
• Repair or replacement of windows and doors (interior and exterior, incl. fitted cupboards, radiators, and pipes)
• Repair or replacement of floor coverings (carpet, parquet, tiles, etc.)
• Repair, maintenance, or replacement of heating systems, electrical, gas, and water installations
• Bathroom modernisations (e.g. installation of new sanitary facilities)
• Repairs of household appliances (washing machines, dishwashers, cookers, TVs, PCs)
• Garden design measures (e.g. paving work, new garden layout)
• Inspection work (chimney sweeps, lightning protection technicians, maintenance of fire extinguishers or smoke detectors)

A detailed list of subsidised tradesmen's services can be found in the BMF letter dated 09.11.2016.

Tax reduction for tradesmen's services

• The tax reduction amounts to 20% of the labour costs, travel costs, and machine costs.
• A maximum of 1.200 Euro per year can be deducted directly from the tax liability. For this, the tradesmen's costs may not exceed 6.000 Euro.
• Only labour, travel, and machine costs are eligible, not material costs.

Limitations and special regulations

• New construction measures: Tradesmen's services in the context of new construction measures are not eligible. This includes all work up to the completion of a household. This means: all work in an existing household is now eligible for tax relief. 
• Measures by public authorities: Tradesmen's services by public authorities that benefit several households (e.g. road construction) are not eligible for tax relief (BMF letter dated 1.9.2021).

Current case law on the subsidisation of advance payments

The Fiscal Court of Düsseldorf ruled in the judgment of 18 July 2024 (Ref.: 14 K 1966/23 E) that advance payments can generally be recognised as eligible expenses. However, the advance payment must be made at the request of the service provider. Voluntary advance payments "into the blue" are not considered.

Which measures are subsidised as craftsmen's services and what is the tax reduction?

Photovoltaic systems: Tax reduction according to § 35a EStG possible!

Since 1 January 2022, photovoltaic systems on single-family homes (including roofs of garages, carports, and other outbuildings) up to 30 kWp are legally tax-free. For systems on multi-family homes and mixed-use buildings, a limit of 15 kWp per residential or commercial unit applies. Photovoltaic systems on predominantly commercially used buildings up to 15 kWp per unit are also eligible.

Tax exemptions have limitations: Expenses related to tax-free income cannot be deducted as business expenses or income-related expenses, according to § 3c para. 1 EStG. This also applies to costs related to the operation of photovoltaic systems, even if they are tax-free.

Photovoltaic systems: Tax reduction under § 35a EStG possible

A deduction under § 35a EStG is possible if it concerns photovoltaic systems in connection with the home. This is based on a simplification rule from the tax authorities (BMF letter dated 17.7.2023, IV C 6 - S 2121/23/10001 :001).

In principle, costs related to photovoltaic systems can be business expenses, but they are not considered. A deduction under § 35a EStG would normally not be applicable. However, the BMF allows the tax reduction in the mentioned letter if the general conditions are met.

It is important that proper invoices are available and amounts are paid cashlessly. Wages in craftsmen's invoices, machine and travel costs are eligible. The work must be carried out on buildings used for own residential purposes.

Photovoltaic systems: Tax reduction according to § 35a EStG possible!

How are chimney sweep fees taken into account?

Eligible craftsman services, which can be deducted directly from the tax liability at 20%, also include chimney sweep fees.

Due to a taxpayer-friendly Federal Fiscal Court (BFH) ruling, tax offices accept the chimney sweep's invoice for the annual chimney cleaning, heating inspection (emission measurement), and the approval of a chimney or stove without differentiating between these activities. The BFH has decided that not only sweeping, maintenance, and repair work by the chimney sweep is eligible, but also the inspection of the functionality of a system is considered an eligible craftsman service for which a tax reduction under § 35a EStG is to be granted. Both the inspection of the system's functionality and preventive measures to avert damage or even eliminate existing damage are eligible. What applied in the court case for the leak test of the sewage pipe equally applies to the inspection of the chimney and the fireplace inspection (BFH ruling of 6.11.2014, VI R 1/13).

How are chimney sweep fees taken into account?

Are extensions to living space also eligible for tax relief?

Expenditure on tradesmen's services in owner-occupied property can be deducted directly from the tax liability at 20%, up to a maximum of 1.200 Euro per year. This includes not only regular renovation work but also one-off maintenance and modernisation measures - and not just in the home, but also on the property (§ 35a para. 3 EStG).

Not eligible are tradesmen's activities as part of a new building project: Until 2014, new building projects were defined as "all measures related to the creation or extension of usable or living space" (BMF letter dated 15.2.2010, BStBl. 2010 I p. 140, para. 20). This includes work for a new build, extension, conversion or addition, as these always involve an extension or creation of usable or living space.

Since 2014, the term "new building project" has been redefined: Since then, a new building project includes "all work related to the construction of a household until its completion" (BMF letter dated 10.1.2014, BStBl. 2014 I p. 75, para. 21).

What does "completion" mean? A building is completed when the main construction work is finished and the building is erected to the extent that moving into the apartments is reasonable or the building can be used for its intended purpose in all essential areas. All work thereafter is eligible. This also benefits builders who move into their new building first and have work carried out later.

What does "construction of a household" mean? All work in an existing household is now eligible. It no longer matters if new living or usable space is created. If the building measures significantly improve the utility value of the property, this does not affect the tax benefit. The new definition of "new building project" applies retroactively to all open tax cases since 2006 (BMF letter dated 10.1.2014, BStBl. 2014 I p. 75, para. 57).

Is "construction expenditure" also eligible? When assessing eligible work, it does not matter whether it is classified for tax purposes as maintenance expenditure or construction expenditure. The latter applies when something new, previously non-existent, is created. Therefore, the labour costs for the subsequent installation of a tiled stove and chimney, the installation of a sun awning, the initial landscaping of a garden, planting a hedge, or building a boundary wall are also eligible.

Unlike before 2013, since 2014 building measures that expand living or usable space are also eligible - provided a household exists.

Examples of eligible work include:

• Extension of a conservatory: Rejected before 2014 because the unheated conservatory is included in the calculation of living space at 50% and the heated conservatory at 100% (FG Rheinland-Pfalz dated 18.10.2012, 4 K 1933/12).
• Installation of a dormer: Rejected before 2014 because this increases the clear height to over 2 m, thus enlarging the corresponding floor area by 50%. A living space extension of just 2.40 sqm was detrimental (FG Berlin-Brandenburg dated 11.12.2012, 4 K 4361/08).
• Conversion of the attic or basement.
• Installation of a terrace roof.
• Installation of a prefabricated garage.

Note: The Berlin-Brandenburg Finance Court ruled against homeowners, stating that tradesmen's services are still considered part of the new build if they were carried out after moving in but were already listed in the building contract: Examples include exterior plastering and painting, laying turf, and erecting a fence (judgment dated 7.11.2017, 6 K 6199/16).

Currently, the Federal Fiscal Court has denied the tax benefit under § 35a para. 3 EStG for structural calculations by a structural engineer. This applies even if the structural calculation was necessary for carrying out a tradesman's service (BFH judgment dated 4.11.2021, VI R 29/19).

From 2022, maintenance costs for small photovoltaic systems can be claimed under § 35a EStG, even if they are no longer considered business expenses. The tax authorities have published a simplification rule allowing this (BMF letter dated 17.7.2023, IV C 6 - S 2121/23/10001 :001).

In principle, costs related to photovoltaic systems are business expenses, but in this case, they are not considered. Therefore, a tax relief under § 35a EStG would normally not be possible. However, the BMF now allows this, provided proper invoices are available and payments were made cashlessly, i.e. by transfer to the service provider's or tradesman's account. The eligible costs include the wage components in the tradesmen's invoices as well as machine and travel costs (each including VAT).

Are extensions to living space also eligible for tax relief?

Do tradespeople need to itemise the wage portion separately?

Customers have a legal right to a correctly issued invoice, especially for tradesmen's services. To deduct labour costs for tax purposes, the labour portion must be shown separately. Find out why this is important and what rights you have as a customer.

Deduct tradesmen's services for tax purposes

Tradesmen's services can be deducted directly from the tax liability at 20% of the labour costs, up to a maximum of 1,200 Euro per year. Only the pure labour costs, including machine and travel costs and the VAT on them, are eligible. Ancillary services such as disposal costs or consumables (e.g. tape or protective film) are also deductible. However, material costs are not eligible for tax relief.

Separate statement of the labour portion

To claim the tax deduction, the labour portion must be clearly stated on the invoice. Customers have the right to a detailed invoice that lists the labour portion separately. This was decided by the Mülheim District Court (judgement of 30.7.2015, 12 C 1124/14). Only with such an invoice can tradesmen's services or household-related services be deducted for tax purposes in accordance with § 35a para. 2 EStG.

Withholding payment if invoice is missing

If the tradesman does not correctly state the labour portion, the customer can withhold payment under § 273 BGB. Issuing a proper invoice is a secondary obligation of the tradesman, which the customer can demand. Payment may be refused until this obligation is fulfilled.

Cash payment can prevent tax deduction

Cash payments often lead to the tax office refusing the tax deduction for tradesmen's services or household-related services. The Eisenhüttenstadt District Court ruled (judgement of 8.3.2021, 5 C 65/20) that the client has no claim for reimbursement against the service provider if cash payments are made. It is the customer's responsibility to comply with the tax requirements.

Conclusion: Make sure that the tradesman shows the labour portion separately on the invoice to benefit from the tax advantages. Always pay by non-cash means to ensure the tax deduction. If there are problems with the invoice or a lack of cost breakdown, you have the right to withhold payment until a proper invoice is provided.

Tip:

The Düsseldorf Finance Court ruled (judgement of 18.7.2024, 14 K 1966/23 E) that advance payments may also be eligible. However, an advance payment cannot be considered without a request from the tradesman.

Do tradespeople need to itemise the wage portion separately?

Are preliminary work in the craft business also eligible for tax relief?

Expenses for craftsmen's services are deductible from the tax liability at 20%, up to a maximum of 1.200 Euro per year. Only labour costs are eligible, and only for work on and in the owner-occupied home. For a long time, it was unclear to what extent work carried out in the workshop of the craftsman's business was also eligible.

Recently, the Federal Fiscal Court decided the matter: If work is carried out in a craftsman's workshop, the wage costs incurred are not eligible for relief under section 35a (3) EStG (BFH rulings of 13.5.2020, VI R 4/18 and VI R 7/18).

According to the BFH, services provided outside the household are not eligible, even if they are provided for the household. What matters is where the service is actually performed. A craftsman's service carried out in the craftsman's workshop on a household item does not have a (direct) spatial connection with the household for which it is provided, but only a functional one.

Therefore, it is generally irrelevant whether the service result is achieved in the household. The spatial-functional connection to the household cannot be established solely by the fact that the craftsman's service relates to a household item.

The first case involved the repair of a courtyard gate, which was removed by the carpenter, repaired in his workshop, and then reinstalled. A tax reduction for the repair of the courtyard gate is only possible to the extent that the carpenter carried out the work on the property and not in his workshop (VI R 4/18).

The second case concerned the manufacture, galvanisation, delivery, and installation of a door (workshop and installation work). There is no tax relief for the manufacture and galvanisation of the door in the workshop, only partially for the installation work in the household (VI R 7/18).

Ensure that the labour costs for the on-site service (installation) are itemised separately on the invoice. However, even if this is not the case, the labour costs can be apportioned on an estimated basis. According to the BFH, "it is actually possible to split the labour costs into a non-eligible 'workshop wage' and an eligible 'on-site wage'. Such a split does not contradict the legislative intent to combat undeclared work" (VI R 4/18, VI R 7/18).

Are preliminary work in the craft business also eligible for tax relief?

Is the connection to the sewage disposal system eligible for tax relief?

Expenditure on craftsmen's services is directly deductible from tax liability at 20%, up to a maximum of 1.200 Euro per year. Only labour costs and any invoiced machine and travel costs plus VAT are eligible.

However, the tax deduction is only granted for work on and in the self-used property. While the tax authorities only want to subsidise measures within the property boundaries, the Federal Fiscal Court considers the necessary connection to the household to still exist if the measure exceeds the property boundary and exclusively serves the property (BFH ruling of 20.3.2014, VI R 56/12).

Currently, the Federal Fiscal Court has ruled as follows: The spatial-functional connection to the taxpayer's household required by § 35a EStG is not present if a construction cost subsidy is charged for the new installation of a public combined water pipe as part of the public collection network (BFH ruling of 21.2.2018, VI R 18/16).

It is therefore necessary to distinguish whether the public supply or disposal network is being created or renewed for the first time (= not tax-privileged) or whether the home is being connected to the public collection network (= tax-privileged). The actual property connection to the public collection network begins at the branch from the respective collection pipe and ends with the property connection shaft at the property boundary. Unlike the house or property connection, the public supply or disposal network is no longer considered part of the household within the meaning of § 35a para. 4 sentence 1 EStG.

The question of whether residents' contributions for a municipal road or for the development of pavements and street lighting can also be subsidised had not yet been decided by the highest court. The Federal Fiscal Court has now ruled that residents' contributions for the development of a public road do not constitute eligible craftsmen's services and are therefore not tax-privileged under § 35a para. 3 EStG (BFH ruling of 28.4.2020, VI R 50/17).

The case: A couple had to pay a contribution to the municipality for the development of the unpaved sand road in front of their property and wanted to deduct part of it as tax-privileged craftsmen's services from their income tax. As the advance payment notice from the municipality only showed a total amount, they estimated the labour costs at 50%. The tax office did not recognise the costs for the construction of the road. The couple argued that the principles established by the BFH for the consideration of the connection to the public water supply should also be applied to the development of the municipal road, as the transport connection to the school and workplace, for example, was necessary for household management.

According to the BFH, work on the road - as opposed to work on an individual property access road from the junction with the main road - is not property-related and therefore not household-related. General road construction is no longer considered a craftsmen's service provided in the household. This is because services in general road construction benefit not only individual property owners but all users. The fact that road construction is also "economically advantageous" for the individual property owner is irrelevant in this respect.

Billing based on the property area and a usage factor does not change the lack of a spatial-functional relationship to the household. This merely serves to distribute the total costs remaining after deduction of the municipal share among the contributors and does not mean that the individual resident pays for the section of road in front of their property.

Even small businesses within the meaning of § 19 UStG or public authorities can provide tax-privileged craftsmen's services. This is particularly the case if a legal entity under public law (e.g. a special-purpose association) has acted entrepreneurially by laying house connection lines against cost reimbursement as part of a commercial operation.

The BMF recently ordered (BMF letter of 1.9.2021, IV C 8 - S 2296-b/21/10002 :001):

For craftsmen's services provided by public authorities that benefit not only individual households but all households involved in the public measures, a subsidy 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 is in line with the BFH ruling of 28.4.2020 (VI R 50/17).

Is the connection to the sewage disposal system eligible for tax relief?

Are residents' contributions also tax-privileged?

Expenses for craftsmen's services are directly deductible from the tax liability at 20%, up to a maximum of 1.200 Euro per year. Eligible are works in the owner-occupied home or "in the household" as well as on the property. But are resident contributions for road renewal also eligible?

Consequently, the tax authorities only want to grant the tax relief for house connections (TV, internet), supply and disposal lines (electricity, gas, water), drain cleaning, sewage disposal, leaf removal, outdoor facilities, paving work, etc. within the property boundary and reject it for measures outside the property (BMF letter dated 10.1.2014, BStBl. 2014 I p. 75, para. 15, Annex 1).

However, the Federal Fiscal Court ruled against the tax authorities, stating that the tax benefit is not limited to services provided exactly within the property boundaries. The necessary connection to the household is still present if it is a measure that extends beyond the property boundary and exclusively serves the property. According to the BFH judges, not only are craftsmen's services that are provided "in" a household eligible, but also those provided "for" the household.

This is because the term "in the household" is to be interpreted spatially-functionally. Therefore, the boundaries of the household - contrary to the tax authorities' opinion - are not exclusively defined by the property boundaries. Rather, craftsmen's services carried out beyond the property boundary on third-party or public land can also be eligible. However, these must be services carried out in the immediate spatial vicinity of the household and serving the household (BFH ruling of 20.3.2014, VI R 56/12).

The question of whether resident contributions for a municipal road or for the expansion of pavements and street lighting can also be eligible had not yet been decided by the highest court. The Federal Fiscal Court has unfortunately recently ruled that resident contributions for the expansion of a public road do not constitute eligible craftsmen's services and are therefore not eligible for tax relief under § 35a (3) EStG (BFH ruling of 28.4.2020, VI R 50/17).

The case: A married couple had to pay a contribution to the municipality for the development of the unpaved sand road in front of their property and wanted to deduct part of it as a tax-privileged craftsmen's service from their income tax. As the advance payment notice from the municipality only showed a total amount, they estimated the labour costs at 50%. The tax office did not recognise the expenses for the construction of the road. The couple argued that the principles established by the BFH for the consideration of the connection to the public water supply should also be applied to the development of the municipal road, as the transport connection to the school and workplace was necessary for household management.

According to the BFH, the work on the road - as opposed to work on an individual property access road from the junction with the main road - is not property-related and therefore not household-related. General road construction is no longer considered a craftsmen's service provided in the household. This is because services in general road construction benefit not only individual property owners but all users. The fact that road construction is also "economically advantageous" for the individual property owner is irrelevant in this respect.

The billing based on the property area and a usage factor does not change the lack of a spatial-functional relationship to the household. This merely serves to distribute the total costs remaining after deduction of the municipal share among the contributors and does not mean that the individual resident pays for the section of road in front of their property.

The BMF recently decreed (BMF letter dated 1.9.2021, IV C 8 - S 2296-b/21/10002 :001):

For craftsmen's services provided by public authorities that benefit not only individual households but all households involved in the public authorities' 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).

Are residents' contributions also tax-privileged?