Tax bonus for craftsmen's invoices: New Federal Fiscal Court ruling

Customers can deduct invoices from tradesmen and household-related services in many cases. However, if the work isn't performed directly in the household, taxpayers are at a disadvantage. This is confirmed by a Federal Fiscal Court ruling.

This article is part of the special feature " Tax bonus for craftsmen's invoices: What you should know".

The Federal Fiscal Court (BFH), the highest court for tax matters, has ruled that street cleaning fees for public roads do not qualify as household-related services. Furthermore, services performed by tradespeople in a workshop are not eligible for tax relief under Section 35a of the Income Tax Act (EStG). The specific case involved a gate that was removed, repaired in a carpenter's workshop, and then reinstalled on the plaintiff's property.

Street cleaning, in turn, was carried out by the municipality as a public service for the residents. Residents had to pay a share of the costs.

Unlike the lower tax court, the Federal Fiscal Court (BFH) upheld the tax office's decision to deny the tax deduction (Judgment VI R 4/18 of May 13, 2020, published on November 19, 2020). The tax credit for household-related services and skilled trades services requires that these services be performed or rendered in the taxpayer's household .

Split the tradesman's bill if necessary

The judges reasoned that a household-related service requires an activity that is usually performed by family members, is carried out in direct spatial connection with the household, and serves the household.

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"Those who don't move with the times, are swept away by the times."

According to previous case law, this is still true for the cleaning of a sidewalk. Cleaning the roadway of a street no longer meets the required close household connection.

Services provided by tradespeople for renovation, maintenance and modernization measures are only eligible for subsidies if they are carried out in direct spatial proximity to the household.

Services performed in the craftsman's workshop are indeed provided for the household, but not in the taxpayer's household. Therefore, the craftsman's labor costs should be divided, if necessary, by way of estimation, into a non-privileged "workshop wage" and a privileged "on-site wage."

Tax credit for home improvement services: Tenants or homeowners who hire a tradesperson for work in their house or apartment can deduct up to €1.200 per household per year (20 percent of €6.000) from their tax liability. Important: Only labor costs are deductible, not materials. And the invoice must not be paid in cash . These are the services you can deduct: Checklist