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 topic Tax bonus for tradesmen's invoices: What you should know

The Federal Finance Court (BFH), the highest financial court, has decided that the Street cleaning fee for a public road is not eligible for subsidies as a household-related service. Craftsmanship services provided in a workshop, not eligible for tax relief under Section 35a of the Income Tax Act (EStG). The specific case concerned a farm gate that had been removed, repaired in the carpenter's workshop, and subsequently 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 previous fiscal court, the Federal Fiscal Court upheld the tax office's refusal to allow the tax deduction (judgment VI R 4/18 of May 13, 2020, published on November 19, 2020). The tax bonus for household-related services and for craftsmen's services requires that these in the taxpayer's household exercised or provided.

Split the tradesman's bill if necessary

Reasoning of the judges: A household-related services requires an activity that is usually performed by family members, is carried out in the immediate spatial context of the household and serves the household.

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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.

Craftsmen’s services for renovation, maintenance and modernization measures are only eligible if they are direct spatial connection to the household would be carried out.

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 bonus for craftsmen’s services: Tenants or owners who hire a tradesman for work in their house or apartment can up to 1.200 euros per year (20 percent of 6.000 euros) from their tax liability. Important: Only the labor costs are deductible, not the material. And the Invoice cannot be paid in cash. You can deduct these costs: checklist