Deduct craftsman costs: Also in Switzerland?

Can Germans who own a house in Switzerland also deduct tradesmen's costs from their taxes? The Cologne Finance Court says yes. The European Court of Justice now has to clarify the matter definitively.

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

The Cologne Finance Court considers it possible that people who are subject to tax in Germany can also file a tax return for a household in Switzerland. Tax reduction for craftsmen and household-related services can receive. 

The tax court has referred the issue to the European Court of Justice (ECJ) in Luxembourg. This court is now supposed to clarify whether it violates the Free Movement of Persons Agreement between the EU and Switzerland (FZA) violates if the Tax reduction for households located in Switzerland is not granted.

The plaintiffs are a married couple with German and Swiss citizenship. They live in Switzerland. The husband worked in Germany and also had an apartment there.

For their shared house in Switzerland, the couple commissioned various crafts and gardening projects. They wanted the costs of the craftsmen to be covered in accordance with the Section 35a of the Income Tax Act (EStG) be deducted from taxes. Per household, wage, travel, and machine costs totaling €6.000 per year can be claimed for tax purposes. The tax office deducts 20 percent of this, i.e., a maximum of EUR 1.200This also applies to Craftsmanship on your own holiday home in other EU countries or in the European Economic Area.

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Right to equal treatment with regard to tax reductions

The tax office rejected the tax bonus in the couple’s case on the grounds that the services in Switzerland (not an EU member) The couple filed a lawsuit against this before the Cologne Finance Court, claiming that this violates the Free Movement of Persons Agreement between the European Union and Switzerland.

The judges of the Seventh Senate of the Cologne Finance Court followed this line. They questioned whether it was compatible with the Free Movement of Persons Agreement that the tax reductions could only be claimed for services performed or provided in a household located within the European Union or the European Economic Area.

The Free Movement Agreement contains a Right to equal treatment with regard to tax benefitsAccording to the Cologne judges, it is not justified to discriminate against the plaintiffs compared to domestic taxpayers.  

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