Tax credit for household expenses

The tax credit for household expenses reduces the amount of tax you have to pay. You can claim the credit if you pay for work to be done in your home, such as cleaning, child care, renovation, or computer installation. You can also claim the credit for work done at a holiday home that you own.

Do you want to claim tax credit for household expenses?

See instructions: How to claim tax credit for household expenses

What kind of work entitles you to the credit?

What are the requirements for the credit for household expenses?

Which types of work entitle you to the credit for household expenses?

How much credit can be claimed?

work done in 2019

Are you requesting a tax credit for household expenses on your pre-completed tax return this spring? The maximum credit for household expenses that you can claim for 2019 is €2,400. The credit threshold is €100, which you have to pay yourself.

You can deduct 50% of the expenses for work you have bought from a company. You can get the maximum credit if the amount you pay to a company for their work is at least €5,000.

If you hired an employee, you can deduct 20% of the wages you paid and the indirect wage expenses.

The maximum credit for household expenses that you can claim for 2020 is €2,250. You can get the maximum credit if the amount that you pay to a company for their work is at least €5,875. The credit threshold is €100 a year, which you have to pay yourself. When you pay a company for the work they have done, you can deduct 40% of the work entitling to tax credit, including VAT. If you hire an individual employee, you can deduct 15% of the wages you pay and the indirect wage expenses.

Credit is only granted for the part of the total expense that is paid for work. You cannot get the credit for other costs, such as equipment or travel expenses. When a company sends you an invoice for their work, the invoice must include an itemisation. The itemisation specifies what part of the total amount is for the cost of the work. You can then claim credit for household expenses based on the work-related part.

Can the credit be divided between me and my spouse?

The credit for household expenses is personal. This means that the total credit you and your spouse together can get is €4,800 (for work done in 2019) or €4,500 (for work done in 2020).

If the tax credit you and your spouse claim totals no more than half of the above amount, you can decide that only one of you will claim the credit. This way, you need to pay the credit threshold amount only once. 

If the amount claimed exceeds the maximum tax credit for one person but only one of the spouses claims the credit, then the Tax Administration will automatically transfer the exceeding part to the other spouse’s tax assessment. 

Example: You and your spouse have ordered renovation work for your kitchen. You want to divide the tax credit for household expenses between yourselves. The sum total of the invoice is €13,000. The amount charged for work is €6,000. 

Both of you submit the invoice total and the amount charged for work on your tax return. In addition, you both indicate what part of the expenses you have paid. In this case, you have paid €3,000 because you have divided the expenses between yourselves. The Tax Administration calculates the credit and subtracts the threshold amount on your behalf.

If you do not divide the credit but one of you claims the whole credit, the amount exceeds the maximum credit. In this case, the Tax Administration automatically transfers the exceeding part to the spouse’s tax assessment.

If the tax credit for household expenses is greater than your total taxes, the Tax Administration automatically subtracts the exceeding part from your spouse’s taxes. 

An unmarried partner is equally entitled to the tax credit. To qualify for the credit, the partner must have paid expenses that entitle to the credit and must live in the same apartment. However, a tax credit can be transferred from one spouse to the other only when they are considered spouses from the point of view of taxation. Who are considered spouses in taxation?

Frequently Asked Questions

You can claim tax credit for household expenses per calendar year.

The credit is deducted from the taxes of the year when you paid the company’s invoice or the wages and employer’s contributions for your employee. For example, if you order renovation work at the turn of the year and you pay invoices for the work during two different calendar years, you can claim the tax credit for both years. However, you will also have to pay the credit threshold amount twice.

The credit is deducted primarily from your taxes on earned income and capital income. Most other deductions reduce the amount of earned income that is taxed, not the amount of tax itself. This means that the tax credit for household expenses has a bigger effect on your taxes.

Please note that if you do not have enough taxes payable to benefit from the full amount of the credit, the amount that was not credited to you this year cannot be carried over to the next year.

If you pay a company for the work: First, check that the company is in the prepayment register. Then look at the invoice you paid and see how much the work-related part was. Make sure that this amount includes VAT. The credit for household expenses is determined by the amount paid for the work with VAT. The credit is 40% (in 2020) of this amount. However, you must subtract the credit threshold of €100 from this amount. The result is the amount of credit for household expenses you will receive.

Example: You can get €2,250 in credit for household expenses, i.e. the maximum amount, if you pay a company €5,875 for the work they have done. (€5,875 × 40%) – credit threshold €100 = €2,250.

If you hire an employee, the calculation is different: From the total amount that you pay to your employee, deduct 15% (in 2020) as well as any employer’s contributions. Subtract the credit threshold amount of €100. The result is the credit you can claim. The maximum amount is still €2,250.