Some companies already point out on their websites that they can claim 20 percent of labor and travel expenses as tax deductions. (Photo: © Andriy Popov/123RF.com)
Read aloud:
Anyone who has to pay taxes can claim part of the tradesman's costs. But only if the contractor has correctly invoiced the work!
But some tradespeople still struggle with this. The right invoice can actually be a great way to advertise your business!
It's almost become a tradition: After the annual heating service, I pick up the phone and call my plumbing and heating company. I ask if they could issue me an invoice so that I can deduct it from my taxes. Sure, they do. And then they forget about it the next year. I have to remind the tiler about a tax-deductible invoice, just like I have to remind the painter. And a quick survey among colleagues and friends shows that there are still quite a few tradespeople who either don't know how to issue invoices correctly or regularly forget.
It would be so easy. "I've written your invoice so that you can reclaim part of the costs from the tax office." Anyone who presents themselves to customers this way scores points, says Britta Schulz. "This way, I present myself to the customer as a great provider, which can be used very effectively as a marketing tool," emphasizes the business consultant at the Münster Chamber of Skilled Crafts. At the same time, tradespeople can hand their customers the recently updated flyer from the Central Association of German Skilled Crafts (ZDH), include it with the offer or invoice, or integrate the information from it into their website. Unfortunately, the reality is often different, says Britta Schulz: "I've even experienced it personally where a tradesperson refused to rewrite the invoice accordingly – the effort was too high for them."
Photo: © Li Xuejun/123RF.com Some don't know, some neglect it out of thoughtlessness, some find the effort too high, some cite "software problems" – this is Britta Schulz's experience in her consultations. Business owners who charge flat rates for labor and materials may also be reluctant to disclose their profit, which, of course, they make not from the materials themselves, but from labor costs. Not only does the corresponding invoice make it easier to enforce their own prices, but it also gives the business owner a strong argument when the customer asks whether the tradesman is willing to work "without an invoice," emphasizes consultant Schulz.
Operations management
Operations management
Operations management
Of course, there are many counterexamples. Some companies already point out on their websites the possibility of claiming 20 percent of labor costs and travel expenses as tax deductions. "Save €1200 in taxes with a new heating system" – this is how Joachim Schwede, a plumbing and heating contractor from Werden, advertises directly on the homepage of his plumbing and heating contractor business, linking to the ZDH flyer. "Deduct tradesman's invoice – save taxes": The Bielefeld-based construction company Else GmbH, as well as the Rhineland-Palatinate construction company Frambach, also provide information on how this works on its website.
Exemplary and not at all difficult. Craft entrepreneurs who want to reduce their customers' tax burden only need to follow a few rules. Twenty percent of a total of €6.000 – a total of €1.200 – can be deducted directly from the tax liability. Provided there is a proper invoice paid by bank transfer. All renovation, maintenance, and modernization work on the owner's own home or one that they live in is deductible. This includes the pure labor costs, travel expenses, and the proportional VAT.
Photo: © stylephotographs/123RF.com Material costs are not deductible. Incidentally, it is sufficient for the invoice to state that a certain percentage of the total amount is included in material costs. For maintenance contracts, it is sufficient for labor costs to be listed in an appendix to the invoice. Owners, homeowners' associations, and tenants can benefit from the tax bonus. A married couple filing jointly can only claim the tax bonus once.
There are some restrictions: Only work on existing buildings – including construction costs – is tax-deductible, not new construction. Furthermore, tradesmen's services can only be claimed for tax purposes if the work is not simultaneously funded by public subsidies. These include low-interest loans or tax-free grants such as those from the KfW development bank. This also applies if the tradesmen's costs have already been claimed as business expenses, advertising expenses, special expenses, or extraordinary expenses.
So it's not all that difficult. Maybe I'll just send my plumbing and heating company the current ZDH flyer. Because sometimes, as ZDH tax expert Matthias Lefarth points out, "the pressure has to come from the customers."
All craft activities for renovation, maintenance, and modernization measures are eligible for tax relief. These include, for example:
Free download The current ZDH flyer "Tax bonus for craftsmen's services
Source: ZDH flyer "Tax bonus on craftsmen's services"
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