What kind of work entitles you to the credit?
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.
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?