Tax deduction for household work to be extended to work done abroad
Proposed legislation would make it easier than before for Finns to get a tax deduction for repairs at a summer cottage in Estonia or cleaning at a holiday home in Spain.
The change would apply to work done in countries of the European Economic Area (EEA) for people who pay their taxes in Finland. Work done by local companies would be acceptable on the condition that the company has not been found to have committed serious violations of local rules.
The EEA comprises the countries of the European Union, as well as Norway, Iceland, and Lichtenstein.
Deductions for household work abroad have been allowed up to now only if the company doing the work is registered with the Finnish prepayment register.
The Ministry of Finance is drafting a proposal for a change in the legislation because a Finnish individual has complained about present practice to the European Commission.
The changes are to take effect at the beginning of next year, but the rules will be applied retroactively over a period of five years.
Under the rules, a person hiring contractors for home repairs, cleaning, or similar household work are entitled to deduct 45 per cent of the cost from their taxable income. The annual limit for such work is EUR 2,000.
Previously in HS International Edition:
COMMENTARY: Children, household help, taxes, and having it all (2.8.2011)
Tax deduction for home services creates jobs for thousands (2.3.2005)