Tax bonus on craftsman's services: Money must be credited to account

Anyone who hires a tradesman and wishes to take advantage of the tax reduction must always transfer the invoice amount to an account. If a shareholder's clearing account is debited, the bonus is not available, according to a recent Federal Fiscal Court ruling.

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

The Tax reduction for craftsmen's services can only be claimed if the invoice amount is credited to the tradesman's account - namely at a credit institution.

The credit of the invoice amount in Ways of offsetting by debiting the shareholder's clearing account The taxpayer's registration with the GmbH providing the service is not sufficient, according to a recent decision of the Federal Finance Court (BFH). 

The appeal against a corresponding judgment of the Thuringian Finance Court of 22 October 2019 (3 ​​K 452/19) was dismissed by the Supreme Finance Court as unfounded (decision of 9 June 2022, published on 1 September 2022, VI R 23/20).

Roofer has commissioned his own GmbH for repairs to his house

The plaintiff was master roofer, who is involved in a GmbH. He commissioned this GmbH in 2017 with Sealing and repair work on his houseHe settled the invoice for this by means of Settlement via his shareholder clearing account.

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In his income tax return, he turned the invoice into a Tax reduction for craftsmen's servicesHowever, the tax office did not grant the requested tax reduction. The tax court also rejected the tax reduction.

No credit institution involved

Since the payment process no credit institution involved and therefore there was no bank documentation of the payment transaction, the formal requirements for the tax reduction for craftsmen's services according to Section 35a Paragraph 3 of the Income Tax Act (EStG) were not met, according to the tax judges.

The Federal Finance Court considers an appeal to be unfounded and an oral hearing to be unnecessary.

Up to 1.200 euros tax reduction per year

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, there is a Tax bonus of 1.200 eurosIf labor costs are only 2.100 euros, the tax bonus would still be 420 euros. 

Important: Only labor costs are deductible, not materials. A married couple filing jointly can only claim the bonus once. 

This is regulated in Section 35a paragraph 3 of the Income Tax Act (EStG)Anyone wishing to take advantage of the tax bonus must have received an invoice and transferred the amount to the tradesman's account at a credit institution. Without the involvement of a credit institution and therefore without bank documentation of the payment transaction This element of the offense is not met, the judges said. Cash payment is also ruled out. 

In this specific case, however, the credit was not made to the GmbH's account, but rather by way of offsetting by debiting the roofer's shareholder's clearing account. This was a the plaintiff's own account with the account-holding GmbH and not an account of the GmbH as the service provider. "This payment method therefore does not meet the legal requirements."

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