Tax Refund for Handyman Services

Has your living room been crying out for a new coat of paint for a long time, and is your house or apartment door waiting to be repainted? Let’s be honest – most of us don’t have time for such tasks or simply can’t do them ourselves. In such situations, professionals come to our aid who can carry out this type of service. No matter which craftsman you hire, always get an invoice. Why is that important? Because you can save a lot of money if you deduct the craft costs from your taxes.

Deducting craft costs from taxes – what are the requirements?

If you assign certain work to German craftsmen, you are entitled to a tax deduction of 20% of the craft costs. In this way, you can save up to €1,200 per year. Please note that you can only deduct work that serves the maintenance or renovation of your house or apartment, but not work that arises from creating something new. In such cases, the financial support includes, for example:

• renovation of rooms,
• restoration of furniture,
• repair of selected electronic devices and household appliances.

Similar rules also apply to services related to private celebrations. If, for example, you celebrate a wedding in your home or garden, certain services can be deducted as household-related services. More on this, what wedding costs are deductible under what conditions, can be found in our detailed guide.

To be able to deduct craft costs from taxes, some important points must be observed.

First, the necessity to use the apartment yourself

If you want to deduct craft services from taxes, it is necessary that you place the order as a private person. In addition, the services must be performed in your private apartment or house (possibly in the associated premises). The German tax office will – if you want to deduct craft services – also consider that you have a second home, a weekend/holiday home, or that your children temporarily use the apartment.

Second: Old is better than new

If you want to deduct craft costs from taxes, the German tax office only considers construction measures carried out in the existing household in the previous year. Examples of this are:

• painting the garage,
• installing a new awning over the terrace,
• expanding an area (e.g., a garden).

A tax refund for craft work in new buildings is not possible. If you move into a new house and want to have additional expansion work carried out by a craftsman in a few months, you should definitely attach a properly completed application for craft work to your tax return. It’s worth it, because the tax office assumes that work on a habitable house is the construction of the house, not the refreshing of the house. Remember that you can file an appeal within one month if your application is denied.

Thirdly – Payment only by bank transfer

For the deduction of craft costs, it does not matter whether the entrepreneur you hire has a registered business or not. What is more important is that he/she carries out his/her work legally and invoices you for the services rendered. Therefore, to receive tax-deductible money for craft services, you cannot pay in cash, because then you cannot present the appropriate documents to the tax office. You can inform the craftsman that you intend to deduct his fee from taxes on the tax return – so he has the opportunity to specify the costs for work and materials separately.

Deductible craft services – what can be deducted?

Below, you will find examples of what can be deducted in craft costs and what cannot. So, which craft services are deductible?

• Fees for craft activities.
• Travel costs.
• Costs for equipment of the works.
• Costs for consumables (e.g., detergents, cleaning agents).
• Labor costs for waste disposal (when you commission this type of work).

However, materials needed for performing the work are not tax-deductible – so you must bear the costs for plaster or paint yourself. Also, work that craftsmen do in their workshop is not deductible – and although the Munich Tax Court ruled on February 23, 2015, that work in a craftsman’s workshop is also deductible, it is still unlikely that the tax offices will follow this opinion; however, remember that there is always the possibility of an appeal.

Craftsman invoice tax – what to know

• Only selected craft professions in Germany are eligible for a lower tax. You can find a complete list in a letter from the Federal Ministry of Finance (BMF).
• When claiming a tax deduction for craft services, you must not exceed the amount of 6000 euros per year.
• You can deduct part of the costs for the work of a moving company if you declare their work as a household-related service.

Craft costs – Summary

If you are planning a renovation in your house or apartment, you have the opportunity to deduct the costs for issued invoices for craft services from taxes. This way, you can save a lot of money over the year. It is best to have your tax advisor support you on how to deduct craft costs from taxes. Also, the tax app Taxando, a fast, easy-to-use, and secure tax return tool, can assist with that.