Expenditure relating to the budget is regulated in § 35a EStG. Thus, household services can also be taken into account to reduce the tax burden. Household-related services are commissioned activities that would otherwise be carried out by the members of the household. We clarify which costs you can take into account for tax purposes and what you should pay attention to in order to make the most of tax advantages.

1. Domestic services

1.1. Definition of household services

Many taxpayers do not have time or desire to clean the apartment, mow the lawn or cut the hedge. Therefore, they regularly commission other persons to take over these activities for them. If this person performs the work legally, i.e. with the presentation of an invoice, the client can specify the costs in his tax return and thus reduce the tax burden. A tax saving of up to EUR 4,000 can be achieved. Here, in particular, the incidental cost accounting for living for rent can also be taken into account. We clarify how the deduction is possible, where you specify the costs and what you should pay attention from a tax point of view.

1.2. The advantage of household services

Fiscal services are particularly worthwhile. The cost of this directly reduces the tax burden. If you had expenses for household services in the amount of EUR 1,000, you can be tax deducted 20% of these costs. These EUR 200 directly reduce the amount of the tax, so that the tax burden is EUR 200 less.

As a rule, expenses reduce only the taxable income by the respective amount. As a result, the costs only enable a lower tax saving. At a tax rate of 25 %, it would be EUR 50.

2. These conditions must be met by household services

2.1. Characteristics of household services

The most important prerequisite for the tax consideration of costs is that there are actually household services. Near-household services exist when work has been commissioned that would otherwise take over members of the household. The work must be carried out as services in the household of the taxable person, i.e. in the apartment or house or on the associated property. If, for example, the preparation of the meal does not take place in the in-house kitchen, but in the restaurant, there is no domestic service. An exception is the BMF letter of 09.11.2016 (IV C 8 – S 2296-b/07/10003 :008) for foliage bladders or winter service on public sidewalks. These are deductible, although they are not provided on their own property.

However, landlords cannot claim household services for the rental property. The corresponding costs are rather advertising costs for obtaining the income from renting and leasing. Expenditure should therefore be included in Annex V of the income tax return.

2.2. Difference to craft costs

Craftsman services (§ 35a paragraph 3 EStG) are to be distinguished from household services. This is because household services can lead to a tax refund of a maximum of EUR 4,000. On the other hand, craftsman costs can be taken into account in addition to household services, but only up to a tax refund of a maximum of EUR 1,200. The distinction between craftsman services and household services can sometimes be difficult.

The Federal Ministry of Finance (BMF) itself makes a distinction in its letter of 9 November 2016 (IV C 8 – S 2296-b/07/10003 :008). Artisanal services are craft activities for renovation, maintenance and modernisation activities carried out in the taxable person’s household. This applies irrespective of whether it is renovation work to be carried out on a regular basis or small repairs, which are usually carried out by members of the private household, or maintenance and modernization measures, which are usually carried out only by specialists.

In Annex 1 of the BMF letter it is written down which expenses constitute household services and which craftsman services. Thus, craftsman services include, for example, work on the roof, the erection of fences, fire protection renovations, roof gutter cleaning, leak testing or the maintenance and repair of electrical systems.

2.3. Household services invoice

The deduction is only possible if the activity is not black – i.e. without invoice and thus without payment of taxes by the service provider. Therefore, the issuance of an invoice is mandatory. The invoice should include the provider of the service with name, address and tax number, the recipient of the service, the nature of the service, the content of the service, the date of provision of the service and the charge, where applicable, between deductible wage costs and travel costs versus material costs. The amount must also not be paid in cash.

2.4. Eligible costs

2.4.1. Type of eligible costs

It is to be differentiated according to the type of costs for household services. The wages payable for the household service are taxable. But also travel costs and costs for the use of machines, such as vacuum cleaners or garden tools can be taken into account. Consumables are also included. This means, for example, rinsing agents, cleaning agents or scattering material. You can also specify the cost of disposing of waste in the tax return if these costs are part of the work on a household service. This includes, for example, additional costs for the disposal of the green cut.

2.4.2. Amount of eligible costs

You can claim up to EUR 20,000 per year in labour costs, travel costs or machine costs for household services. Of these, 20% reduce the tax liability. Therefore, a tax deduction of up to EUR 4,000 is possible. It is not possible to carry over costs incurred into the following year or the previous year.

2.4.3. EUR 510 Tax Deduction for Minijobs

For service providers working as domestic help on a 520-euro basis, the tax burden can be reduced by up to EUR 510. The deduction is possible in addition to the deduction for household services and labour costs for craftsmen. Taking into account costs for craftsmen, household services and domestic help, a tax saving of EUR 5.710 is therefore ideally possible.

2.4.4. Au pair

Costs for an au pair also represent household services. However, the costs incurred also include those for accommodation and food. However, the costs cannot be proven by paying to a corresponding account. In order to allow a deduction nevertheless, it would be conceivable to agree a refund with the official reference values in kind.

It is tax-advantageous if the au pair is as complete as possible for child care and this is contractually agreed. Then the expenditure is special expenditure.

2.5. Examples of household services

For example, costs for an emergency call system or pet care in the home as well as caretakers are deductible. Care services are also considered, even if the staff does not have specific training. Childcare at home can also be considered as a household-related service.

According to the Finance Court of Hessen, costs for a dog gassi service should also be considered as household-related services. This was accepted by the tax court, although the service provider walks with the dogs and usually leaves the property. Carrying the dogs across the boundaries of the property is a service directly related to the household. The tax court did not allow the appeal against this. The non-admission complaint filed by the tax office has been rejected by the Bundesfinanzhof. Dog owners who claim a corresponding gas siservice should therefore first specify their costs in the tax return. If the tax office refuses the deduction, you should object to this assessment and refer to the judgment (FG Hessen, judgment of 1 February 2017, 12 K 902/16).

2.6. No household services

You cannot consider tutoring as a household service, even if it is offered at home. General waste charges cannot be taken into account either. Excluded are also costs for grave care. This also applies to the costs of the administrator of the housing association.

2.7. consideration for tenants

Tenants can also take into account the expenses for household services. It is not necessary that the tenants have concluded the contracts directly with the service provider. Corresponding costs can be found in the incidental cost accounting. Examples of costs that the tenant has to bear are costs for gardening, caretaker, cleaning service, winter service or chimney sweep. However, the costs for their consideration must be clearly broken down and assigned to the rented apartment. The Berlin Regional Court ruled that tenants have a right to determine the amounts for household services and craft costs from the operating expense statement.

It is still problematic that in income tax law the outflow and inflow principle applies. Therefore, costs and bills paid in one year must be stated in the corresponding annual tax return. It is conceivable, however, that the operating expense statement for the past year is not yet available. Then there is the question of how the corresponding costs should be taken into account. It is then possible to set the costs in the year in which you received the bill. This should generally be the most practical. Alternatively, advance payments may be recognised. Finally, it is conceivable to deduct the expenses subsequently. The tax office must exceptionally change the tax assessment, even if the one-month opposition period has expired.

3. You should definitely pay attention to this.

It is particularly important to make sure that labour costs and other costs are visible and broken down in the bill. If the division is not clear from the invoice, you should request a new invoice.

Members of a condominium owners’ association who jointly bear the costs of the winter service can also claim these costs for tax purposes. However, the prerequisite is that the total expenses incurred are distributed neatly among the individual owners. Therefore, care must be taken that the expenses are detailed in the annual report and clearly assigned to the housing units. The administrator can issue a certificate for this, which can then also be submitted to the tax office. However, the activity of the administrator does not form part of household services.

It is also conceivable that your own children provide the household services. Then there is more to consider for tax consideration. The children are no longer allowed to live in the household. In addition, the contract with the child must have been concluded correctly under civil law. It must continue to be designed in the same way as it would have been agreed with a third party, i.e. in line with the arm's length principle. Furthermore, the agreed services must actually be provided.

Important tax tips for household services

You can make the most of the tax advantages of household services. It is conceivable to divide the costs skillfully over several years so that the maximum amount can be claimed each year. If the costs exceed the maximum amounts in one year, it is considered to spread them into the new year. This is possible if you commission a service provider for several years. For the tax consideration of the household service, it does not depend on the time of provision of the service, but on when the transfer took place. Therefore, such payments could also be made in the following year in order to reduce the tax burden.

Often expenses can be considered both as a household service and as a craftsman’s service. In order to be able to take full advantage of the respective maximum amounts, you should therefore consider whether they can also take the costs into account as craftsman services. Only the double detection of such application is not possible. A differentiated allocation is possible in gardening work. In the BMF letter there is no clear delineation for help in gardening. Rather, garden design should fall under craftsman services. Garden care, on the other hand, should be covered by household services.

Furthermore, costs may be exceptional burdens. Even then, you should make a clever allocation in order to make full use of the maximum amount of the household service. This is conceivable, for example, for care costs. If costs are necessarily higher than those incurred by the average taxpayer with comparable incomes and living conditions, they constitute exceptional burdens. The reasonable burden, on the other hand, is a service close to the household. The same applies to costs incurred due to a flood or other disaster. Even then, they can take into account the reasonable burden as a household service or craftsman's service.