What the courts say about the craftsman bonus

The correct issue of tradesmen's invoices has often occupied German judges, as there are many details to be clarified. A selection of important rulings.

This article is part of the special topic Tax bonus for tradesmen's invoices: What you should know

The Federal Fiscal Court (BFH) has established a fundamental rule for tradesmen's invoices: The invoice and the transfer receipt should be carefully stored, as the tax office does not recognize cash payments (BFH, Ref. No.: VI R 14/08). While the receipts do not need to be sent directly to the tax office with the tax return, they must be available upon request. If an invoice is not submitted in the correct tax year, it cannot be credited later (Münster Fiscal Court, Ref. No.: 11 K 4034/09 E).

Even if the delivery date is the same as the invoice date, the date must be stated on the invoice (Federal Fiscal Court, Ref. No.: XI R 62/07). Entrepreneurs wishing to claim input tax deduction must verify that the name and address of their business partner are correct (Federal Fiscal Court, Ref. No.: VR 61/05). VAT exception: Tradespeople are not permitted to charge VAT on invoice items incurred for so-called extended construction periods. (Federal Court of Justice, Ref. No.: VII ZR 280/05)

Work on new construction is not deductible

To benefit from the tax advantages, the invoice does not have to be paid by the client. The tax office must grant the reduction even if, for example, the taxpayer's parents pay the amount (Saxon Tax Court, Ref. No.: 4K 645/09). Or the son pays for it by way of the old-age pension obligation (Lower Saxony Finance Court, Ref. No.: 2K 239/12).

Another principle: Craftsmen’s services are only tax-privileged if they are carried out in an existing household, which means that work on a new building cannot be taken into account (Münster Finance Court, Ref. No.: 14 K 1141/08 E). Nor are services that a craftsman carries out in his workshop outside the customer's home (Munich Finance Court, Ref. No.: 13K 55/08).

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Married couples can only use the bonus once

However, the craftsman's bonus also applies to gardening work (Federal Fiscal Court, Ref. No.: VI R 61/10). It even applies to development work on a property, in this case, the connection to the water supply (Berlin Brandenburg Finance Court, Ref. No.: 7 K 7310/10). Spouses with multiple apartments can only claim the tax reduction once, up to the statutory maximum amount (Federal Fiscal Court, Ref. No.: VI R 60/09). Tenants cannot use the bonus if they only pay flat-rate amounts for cosmetic repairs to their landlord (Federal Fiscal Court, Ref. No.: VI R 18/10).

Anyone who wants to take advantage of the tax bonus for their holiday home abroad must either be fully liable for tax in Germany. Or, if they are permanently resident abroad, they must generate taxable income in Germany.

Craftsmen must also observe other rules for a correct invoice. Anyone wishing to claim input tax deduction from an invoice must submit an invoice to the tax office that is correct down to the smallest detail. This must be included (Section 14 of the Value Added Tax Act):