Most people believe that a domestic help or cleaning lady is cheaper if she is employed by them through moonlighting. This is because you don't have to pay tax for the service provided and can therefore supposedly save money. This magazin shows: often this steep thesis is not true! Read this article to find out how you too can save money with an official and registered domestic help.
Deduct domestic help from tax correctly: A multitude of possibilities
Around four million households in Germany employ a cleaner or domestic help. However, new study results show that nine out of ten domestic helpers in Germany are employed illegally and paid in cash "on the hand" out of concern that the tax burden could be too high. In the vernacular, this is simply called "moonlighting". After all, what is supposed to happen in your own house or apartment?
The issue of illegal provision of "household-related services", as it is called in politics, is currently even being discussed in the Bundestag. The federal government wants to provide a remedy for consumers in the form of vouchers for registered domestic help. But you can already make huge savings with a registered and certified domestic helper. All you have to do is include a few small details in your tax return.
What is undeclared work?
As soon as you, as a private household, commission a person to work for you without the person paying tax, this is referred to as moonlighting. Neither you nor the person working for you officially pay taxes for this business between you. Household-related services in particular, such as cleaning help or tradesmen, are often ignored and not declared by the employer.
You might think that this is a minor matter. After all, it's just a cleaning job or a quick repair by a tradesman. But if the tax authorities find out, there is often a lot of shouting. Many private clients are not aware of the penalties, sanctions and costs that can be incurred by "saving taxes".
What penalties can employers expect for illegal employment?
According to §§ 8-11 SchwarzArbG, undeclared work is punished at least as an administrative offense. For example, fines of up to €500,000 or a prison sentence of up to 10 years are possible as penalties for illegal employment.
Employers face the following penalties for illegal employment, among others:
- Failure to register employees for social security: fine of up to €25,000
- No business registration: fine of up to €50,000
- Commissioning of illegal work: fine of up to €50,000
Furthermore, unpaid taxes and social security contributions must be paid. This is often followed by proceedings for tax evasion and a breach of duty towards the German social security authorities and other offices that are obliged to report.
Disadvantages of undeclared work
In addition to the severe penalties that can be imposed on employers and employees, there are other pitfalls. What happens in the event of an accident, for example? Who pays for it? Right, you've already guessed it: in cases of hardship, you! Paying for medical treatment and rehabilitation yourself can quickly eat up several thousand euros. Your supposed tax savings from not officially registering domestic help are therefore invalid.
Furthermore, you are actually ensuring poor working and wage conditions. Think about yourself, who wants to work without being insured, without entitlement to health care or continued payment of wages in the event of illness? Undeclared cleaning and domestic helpers receive an average wage of €10 per hour. However, they can barely cover their own living costs and are poorly protected.
Another disadvantage is that both you and the illegal force always run the risk of being reported anonymously by neighbors and the like. Who likes nasty surprises?
Deduct domestic help from tax: How to do it right!
There are two ways for you to legally employ domestic help and at the same time deduct it from your tax bill and thus save tax.
Household help mini-job on a 520€ basis
You can easily and conveniently register a domestic helper via the Minijob Zentrale. This allows you to employ your domestic help on a €520 basis, which is taxed correctly and offers all the benefits of employment. In the case of a €520 job, the domestic help works a fixed number of hours per week and is considered to be marginally employed.
Private individuals often do not know what can be claimed for tax purposes. You can claim mini-jobs in your tax return. 20 percent of the costs for a marginally employed person can be deducted from tax, however, this tax refund amounts to a maximum of 510 euros in total per year (§ 35a paragraph 1 of the Income Tax Act (EStG)). The employment is entered in line 4 in the annex for household-related services. The advantages outweigh the disadvantages, as the mini-jobber is employed by you risk-free and you can claim part of the expenses for tax purposes. It may therefore be worth registering with the Minijob Center.
Hire domestic help privately: The household check procedure
The household check procedure is a simple registration procedure for a private household that wishes to employ a mini-jobber.
Domestic help is usually employed by a private employer, who can save taxes through the household cheque procedure, as they have to pay lower lump sums and receive a tax reduction on their income tax. They receive help in the household and benefit from the tax reduction. However, the challenge is always that, as a private employer, you also have many medium-term obligations.
Domestic help agency: Book domestic help via service provider
You don't want to employ a domestic worker yourself but still want to do so legally? That's no problem either! Contact an approved and certified service provider and company, such as the Agentur für Haushaltshilfe. This service provider will accept your order and then provide you with a domestic helper who is subject to social insurance contributions. You only pay for the service directly to your contractual partner and have nothing to do with employment and insurance law. Here too, you can claim 20 percent of the service for tax purposes. The expenses that can be deducted are capped at a maximum of 4,000 euros per year. This form of employment is entered in line 5 in the annex for household-related services in the tax return.
Advantages of legally employed domestic help
In addition to the tax aspect, legally insured domestic help in private households has other advantages for you. You don't need to fear any penalties, you can also talk openly with neighbors about your support and you are off the hook in the event of accidents at work and the associated continued payment of wages. You also support fair and sustainable employment that does not leave people unprotected in precarious situations. In this way, you provide all the conditions for a pleasant workplace.
When hiring an agency, you should therefore always make sure that the agency provides a replacement in the event of illness. This way, you don't have to worry about any absences and can devote yourself to the finer things in life with a clear conscience. You also have the advantage that an agency provides you with an organizational contact person who is responsible for you. If you have any questions about expanding your business or applying for financial support from the state, you will always have a competent contact person. Agencies such as the Agentur für Haushaltshilfe offer a basis for employing mini-jobbers in a private household.
Domestic help: Are there subsidies and grants?
There is still no direct financial subsidy for domestic help, apart from the tax benefits. However, the German government, under the leadership of Hubertus Heil (SPD), is planning to create a voucher solution that will enable every citizen to legally employ domestic help. Undeclared work in this area is thus to be greatly reduced. Not only for your protection, but above all for the protection of illegally employed domestic and cleaning helpers, care workers and craftsmen.
The plan is that families with children, single parents and households with people in need of care could receive subsidies of up to €2,000 per year in the form of a voucher. This would help many people immensely to cover the costs of household help and services.
Who is legally entitled to household assistance?
If you belong to one of the following groups, you are entitled by law to support and assistance with household chores:
- Pregnant women before and after childbirth
- after an operation
- after an accident
- in the event of a serious illness
- from a care level 1
Pregnancies, illnesses, operations or accidents can turn your life upside down. But you are not alone, because in these cases you are entitled to temporary help in the household from a domestic help to bridge the additional burdens. It is therefore essential that you have your legal entitlement checked by a certified service provider and take advantage of every opportunity to make your life easier by hiring a cleaning assistant, for example. You can receive support of up to €125 per month. The stress of pregnancy or an illness/healing phase is already great enough that there is often no time or energy left to take care of tasks such as cleaning the windows, washing the laundry or cleaning the bathroom. The most important thing at this time is a speedy recovery: Have your claim checked now!
People in need of care with a recognized care degree are entitled to care and relief services (also known as "relief amount") in the amount of 125 euros per month, starting from the first care degree. This includes housekeeping and domestic care by a home help. The home help must be recognized under the respective state law for the expenses to be covered. An agency, such as the Agentur für Haushaltshilfe, can easily arrange a legally recognized home help for you. The invoices can be sent to the relevant care insurance fund in order to finance the expenses.
What tasks exactly does a licensed home help take on?
Everyday companions and home helps generally only support you with household tasks. Not to be confused with a caregiver who looks after the medical care of their patient. Domestic helpers primarily take care of the household.
The tasks of a domestic help include
- Cleaning
- Tidying upShopping
- Cooking
- Watering flowers
- Washing
- Ironing
The tasks of a home help do not include gardening or nursing/care activities, such as assistance with eating, changing dressings, cleaning the body or positioning. These are the activities of an outpatient care service or caring relatives.
Conclusion on household help tax:
- Private households should ensure that domestic help is correctly deducted from tax
- the tax reduction is entered in the household-related expenses annex in the tax return
- 20% of the expenses for the services of a legal domestic help can be legally deducted
- Legal domestic helpers are specialized in their activities through training
- They help to ensure that the working conditions comply with the legal requirements, for example by registering with the Minijob Center
- there are extra services that take care of the expenses and planning of domestic helpers
- You can assert legal claims to obtain further financial relief
As you can see, there are much better and safer alternatives to moonlighting. Not only are you supporting society, you are also acting legally and saving time, nerves and money. For questions about domestic help and everydaycompanions, our advisors will be happy to help you personally.
