Domestic help credit expanded and increased from January 1st

More than 180 million euros in deductions in 2007 taxation

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Maintenance and renovation of homes and holiday homes are the most usual services which households buy from various entrepreneurs and for which the Finnish Tax Administration can grant the domestic help credit.
      Domestic work including cleaning, cooking, laundering, shopping, gardening, mowing the lawn, as well as ploughing up the yard also qualify for the domestic help credit. A taxpayer can also claim the tax credit for expenses incurred for the purpose of the care of children, the elderly, disabled and ill persons.
     
The maximum amount of the domestic help credit in last year’s taxation was EUR 2,300.
      At the beginning of the current year the amount was increased to EUR 3,000.
     
From now on, the domestic help credit will also cover installation and support services of information technology. For example, households are now able to apply for the domestic help credit for the installation and maintenance of a digital decoder, an antenna, a computer, or related devices.
      Furthermore, domestic services, renovation and IT work that has been done in the taxpayer’s parents’ or spouse’s parents’ home, or in the holiday home, will also qualify for the domestic help credit.
     
The taxpayer will have to apply for the tax credit either after the fact, when his or her final taxes have been assessed, or in advance, in which case it could be deducted from the tax withheld in advance.
      The taxpayer is entitled to deduct from his or her earned income a total of 30% of the salaries plus secondary expenses paid for the domestic services.
      In a case of an entrepreneur or a company belonging to the prepayment register the deduction is 60 %.
     
In 2009, the maximum amount of EUR 3,000 can consist of domestic, renovation, or IT work or all of them, provided that the taxpayer first pays his or her own share of EUR 100.
      The maximum credit is granted if the amount of work totals approximately EUR 5,200.
      Because the domestic help credit is individual, a couple can get a deduction of EUR 6,000 in 2009.
     
The Taxpayers' Association of Finland suggests that if the maximum of EUR 3,000 is not exceeded, only one of the spouses should apply for the decuction, in order to avoid paying the EUR 100 liability twice.
      According to the information collected by the Taxpayers' Association of Finland and Statistics Finland, the number of those citizens who use the domestic help credit has been growing steadily.
     
In particular well-paid Finns with an annual income of at least EUR 50,000 have been seen to use the benefit. Some 30% of those taxpayers who earned more than EUR 80,000 applied for a domestic help credit in 2006.
      According to the Finnish Tax Administration, nearly 270,000 taxpayers were granted the domestic help credit in 2007. The aggregate sum of deductions was EUR 181.7 million.
      The principle is that the domestic help credit can be granted for all services bought voluntarily, while for example the cost of the statutory chimney-sweeping that has to be carried out each year does not qualify for the tax credit.


Previously in HS International Edition:
  Domestic help credit could be expanded to cover materials (22.8.2008)

Links:
  Finnish Tax Administration
  Taxpayers´ Association of Finland
  Statistics Finland

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