Tax reduction on household expenses

You have someone shovel your snow. There is an invoice. You can deduct part of these taxes from your tax return.

I want to inform you about the tax deduction of household expenses. This is something we do not have in Estonia and the idea of the Finnish government is to support the official taxation of all services provided, even when done at home.

When you buy services for your home or vacation home, you can deduct part of your expenses in your taxation as a household deduction. You will receive a deduction for routine household, care and maintenance work, maintenance and renovation work, and IT installation and consulting services.

You must apply for the household deduction yourself. Work performed and wages and salaries paid must be declared for tax purposes either online via Omavero.fi or by post, for example on form 14A (household deduction from wages and salaries paid to the enterprise).

The deduction is calculated from the VAT price. The deduction is only given for the share of the work, not for the materials, for example. In 2021, you can deduct as a household deduction 40 per cent of the salary paid to an entrepreneur or company on the prepayment register or 15 per cent of the salary paid and incidental expenses.

The maximum amount of the household deduction in 2021 (as in 2020) is EUR 2,250 per. The amount may consist solely of household, renovation or IT work, or all of these. The reduction is accompanied by an annual deductible of EUR 100.

In 2021, you will receive the maximum reduction, ie a reduction of EUR 2,250, if the total amount of work in the services you purchase from the company is EUR 5,875 [(5,875 x 40%) – 100) = EUR 2,250].

The deduction is granted to the spouses as they request it. If the limit of € 2,250 is not exceeded, the deduction should only be requested for the other spouse. In this way, the deductible is reduced only once. If the amount claimed for deduction exceeds the maximum, the authority will automatically deduct the amount not deducted from the other spouse’s taxes. Spouses can receive a total of € 4,500 in deductions. If there is only one tax, the deduction can be made from the taxes of the person who has them.
Source

The household work that is usually deducted is:
• cleaning
• shopping
• cooking
• lawn mowing
• snow cleaning
• home party catering

However, interior design or emptying a dirt well are not work that qualifies for a deduction.

You can deduct from care and nursing work that is done at home, such as caring for children or the elderly at home.  Hairdresser, manicure and other beauty services are not considered to be normal nursing and care work at home.

Maintenance and renovation work that qualifies for a household deduction
• renovation of the kitchen, bathroom or other rooms,
• renovation of sauna and basement facilities,
• painting buildings,
• installation of balcony glass,
• plumbing and electrical work as well,
• renewal, improvement and repair of heating systems.

A household deduction can also be obtained for maintenance of the boiler oil bulb, cleaning of the boiler, efficiency measurement of the boiler and cleaning, measuring, adjusting and maintenance of ventilation equipment. However, no deduction can be made for „chimney cleaning“.

The installation and repair of household appliances and equipment, such as refrigeration appliances or dishwashers, is not considered deductible maintenance work, unless it is carried out in connection with major repairs.

Information technology advisory and installation services entitling to a household deduction include:
• installing and repairing a digital device or antenna,
• installing and repairing your computer,
• setting up telecommunications connections,
• installation of security services, purchased software and purchased, updates on the IT equipment,
• guidance work on home information and communication equipment and connections (if it takes place at home).

The installation work of the alarm and security system is now subject to a household deduction. The surveillance system can be installed both at home or in a holiday home. No household deduction for maintenance and other service charges for alarm and security systems.

Source

And the official website about this is vero.fi

I wanted to share this information, because this is something complicated for a foreigner to understand. 🙂

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