Blog

4.6.2019

How can a household purchase labor?

kotitalousvähennys kevytyrittäjä – hushållavdraget

Households might often need to hire a professional for something like renovation, cleaning or yardwork when there is not enough time or expertise. 

There are two ways to do this: you can either hire a professional and take care of paying their salary yourself or you can buy the work as a service, only pay one bill and let someone else take care of the paperwork. 

In this post, I will talk about a handy way for households to hire work. 

Light entrepreneurship is an easy way to purchase help for households 

Light entrepreneurship is a simple and easy path for purchasing professional work. Light entrepreneurship means that a household hires a private individual of their choice, and the hired individual bills the household through an invoicing service. 

The household and light entrepreneur agree on the work and payment, and the invoicing service takes care of all the bureaucracy related to invoicing and paying salaries. 

The household will only have to pay one bill that the light entrepreneur has created using the invoicing service’s handy online service. Effortless, isn’t it? 

Because the invoicing service pays the light entrepreneur, the household can request a tax credit for household expenses

Purchasing the service from a professional is an easier and a more flexible way to get work done, because the household does not need to commit to the role of an employer or to a considerable amount of administrative work. The client household or the person doing the work do not need to worry, since the light entrepreneurship service takes care of all necessary payments and reports by the book. 

Light entrepreneurship gives the right to tax credit for household expenses 

The personal liability portion for the tax credit for household expenses in 2019 is EUR 100 and the maximum credit is EUR 2,400 per person. Because the tax credit for household expenses is personal, both spouses can get their own credit. In such a case, the spouses’ maximum credit for the year is EUR 4,800. 

To receive tax credit for household expenses for work someone did, the entrepreneur or company must be registered in the prepayment register. The company behind UKKO.fi is SLP Group Oy, which is registered in the prepayment register. This means that households may receive tax credit for household expenses from services that they purchase from UKKO.fi’s light entrepreneurs. 

kevytyrittäjä kotitalousvähennys

The tax credit for household expenses is 50% of the part of the expenses relating to work subject to VAT. You can also receive credit for services that did not include VAT. As an example, if you pay a company EUR 1,000 for a job, the credit is EUR 500, which is half of the total sum. When the personal liability portion of EUR 100 is deducted from the credit, the total deduction in taxation is EUR 400. 

To receive the maximum credit for 2019, then, you will need to purchase services for a total of slightly over EUR 5,000. You can go to the tax authorities’ website to find plenty of information about what types of work are considered eligible for tax credit. 

 How much tax credit for household expenses you will receive for paid work depends on whether the person doing the work was working under a contract of employment with the client or if the work was done as an assignment. If the work is paid for with a salary for an employee working under a contract of employment, you can deduct 20% of the employee’s gross wage and all related social security costs as tax credit for household expenses. 

Piia Peiponen
Author

Piia Peiponen

Piia is a Communications Specialist passionate about social media and Finnish language. When she isn’t working, you’ll find Piia listening podcast or being a dedicated sports fan.

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