New ruling on craftsmen's invoices

Tax reduction for craftsmen's services: Even a mandatory static calculation can reduce the tax.

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

Private individuals can deduct the labor costs for almost all home and yard renovations from their taxes – up to €1.200 per household per year. Only the labor costs are deductible, not the materials. Expert assessments are not normally considered for tax purposes.

Now, however, the Baden-Württemberg Finance Court has ruled in the case of a married couple who needed an expert to replace roof beams that the tax reduction for craftsmen’s services also applies.h Expenses for the static calculation includeThe structural analysis was absolutely necessary for the execution of the work (judgment of 4 July 2019; Ref. No. 1 K 1384/19). 

Private customers can claim 20 percent of the labor costs up to a maximum of 6.000 euros each year for renovation and refurbishment work within your own four walls. If you reach the maximum amount, you receive a tax bonus of 1.200 euros.

The tax court justified its ruling in favor of the taxpayers by stating that the tax bonus regulation on craftsmen's services covers "all craft activities", but not expert activities, such as Valuation of a property and preparation of an energy certificateIn this specific case, however, there is a "close factual integration" between the static calculations and the subsequent craftsman services.

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Static calculation in the couple's household

The static calculation served "the proper and safe implementation of the replacement of load-bearing support elements for the roof of the residential building" and was carried out in a single household, the judges stated. Therefore, there is a "immediate spatial connection to a household".

The spatial connection also results from the On-site meeting and inspection of the house. A split according to the place of performance of the calculation appeared to the court to be "artificial" and contradicted the purpose of the law, which Combating undeclared work.

The calculation was inextricably linked to the main service

The decisive factor is that the apartment benefited the plaintiffs. The couple each owns half of the house, which they use themselves. Damaged wooden supports were replaced with steel supports. The plaintiffs commissioned a tradesman for this purpose. In his opinion, a prior structural calculation was "absolutely necessary." A meeting was held on-site for this purpose. The plaintiffs paid the invoiced labor costs of €535,50, including VAT.

All Information about the craftsman's invoiceIn their income tax return for 2015, they declared a Tax reduction for tradesmen's services ("chimney sweeps, structural engineers") in your own household totaling 565 euros.  

The tax office recognized only €28 for the chimney sweep, or €6 (20 percent of €258) as a tax deduction for tradesmen's services. The tax office stated that the static calculation was a non-tax-privileged expert service.

The Federal Fiscal Court has the final say on this matter. The appeal proceedings are pending there under case number VI R 29/19.

Source: Baden-Württemberg Finance Ministry