A craftsman invoice is also a small tax bonus: 20 % of labor costs reduce your German income tax directly — up to €1,200 per year. Section 35a of the Einkommensteuergesetz (EStG) is one of the rare provisions that works without endless paperwork or itemised deductions. The hurdles are small, but the pitfalls are real. The craftsman tax deduction calculator shows your actual saving.
A tax credit, not a deduction
Unlike special expenses (Sonderausgaben), which reduce taxable income, §35a directly reduces the assessed tax. A €1,200 credit cuts the final tax bill by €1,200. By contrast, an equivalent special-expense deduction would yield only your marginal rate × amount — at 30 % that's €360. The leverage is roughly 3× higher.
What counts as a craftsman service?
Eligible work covers renovation, maintenance and modernisation in your owned or rented household. Typical examples:
- Painting and wallpapering
- Electrical work, repairs to outlets, lights, fuses
- Plumbing, heating repairs, boiler / heat-pump maintenance
- Roofing, façade, window and door replacement
- Flooring, tiling
- Chimney sweep, appliance hookup
- Garden and paving work (insofar as it is craftsman work)
- Repair of household appliances — even in the workshop!
Not eligible: new-build construction, expert-witness reports, pure architect or structural-engineer fees, chimney-sweep measurements without repair (disputed, but most Finanzämter accept).
Two key numbers: rate and cap
§35a Abs. 3 EStG defines:
- Tax credit: 20 % of eligible costs
- Annual cap: €1,200 per calendar year
The maximum credit is reached at €6,000 of labor cost. Anything beyond produces no further saving in the same year. The cap is per household — married couples filing jointly share one €1,200 ceiling. Two adults living in legally separate households (e.g. a flat-share with separate contracts) each have their own.
Eligible vs. non-eligible costs
The invoice must itemise labor, travel and machine costs separately — otherwise the Finanzamt often rejects the entire entry.
| Item | Eligible? | Note |
|---|---|---|
| Craftsman labor hours | ✅ Yes | Core component — including apprentice hours |
| Travel surcharge / mileage | ✅ Yes | No fixed limit if reasonable |
| Machinery and consumables | ✅ Yes | Rented tools, wear, electricity |
| Material costs (paint, tiles, pipes) | ❌ No | Hard exclusion |
| VAT on labor | ✅ Yes | Included in the 20 % |
| VAT on materials | ❌ No | Follows main item |
Worked example: heating system upgrade
The Schmidt family had a new heating system installed in May 2026. The invoice from the heating engineer:
- Materials (boiler, pipes, fittings): €9,500
- Labor, travel, machine use: €3,200
- Total gross: €12,700
Tax-credit calculation:
- Eligible costs: €3,200 (labor + travel + machinery only)
- 20 %: €640
- Below the €1,200 cap → fully deductible
- Tax saving: €640
The family's net cost is therefore €12,060 instead of €12,700. If labor had been €6,000 or more, the cap would kick in at €1,200.
Splitting across years
The biggest optimisation lever: break large renovations in half. €8,000 of labor on a single invoice yields only €1,200 (capped). Split across two calendar years — say a deposit in December and the balance in January — you can claim up to €1,600 (€800 × 20 % each, both below cap). Talk to the craftsman before the work begins.
Important: the payment date matters, not the invoice date (§11 EStG cash basis). An invoice issued in December 2026 but paid in January 2027 belongs to the 2027 tax return.
Mandatory: invoice and bank payment
Two hard requirements:
- Written invoice with separate itemisation of labor and material
- Non-cash payment: bank transfer, direct debit, or card — cash is rejected (§35a Abs. 5 EStG)
Keep invoice and bank statement for at least two years — the Finanzamt may request them. Payments to a craftsman who shares the same household (a family member) do not qualify.
§35a for tenants
Renters can claim too. The annual service-charge statement from the landlord lists chimney sweep, maintenance, caretaker and similar items. To the extent these are labor costs, the share is allocated to the tenant and goes into the tax return. The landlord must on request issue a corresponding statement.
Three buckets — don't confuse them
§35a EStG defines three independent caps that can all be claimed in the same year:
| Bucket | Examples | Rate | Cap |
|---|---|---|---|
| Mini-job in household | Cleaner, babysitter | 20 % | €510 |
| Household services | Cleaning company, gardening, care | 20 % | €4,000 |
| Craftsman services | Painter, heating, electrician | 20 % | €1,200 |
Combined, that's up to €5,710 in tax credits per year if all three buckets are exhausted.
Common mistakes
- Material and labor on the same line — Finanzamt often rejects the whole entry
- Cash payment — automatic disqualification
- More than €6,000 labor in one year — surplus is wasted, split where possible
- Pure administrative costs (permits, applications) — not eligible
- Double-counting — claiming the same item under work-related expenses or rental income forfeits §35a
- Tenants forgetting to request the landlord statement
Optimisation tips
- Ask for split itemisation upfront — make labor a separate line
- Split big projects — deposit in December, balance in January
- Review tenant service-charge statements — chimney sweep and caretaker count
- Combine all three buckets — cleaner + heating contractor + gardening mini-jobber stack
- Bonus check — large renovations dovetail with the home-loan calculator for combined planning
More useful calculators
- Craftsman tax deduction calculator — your saving in seconds
- Special expenses calculator — other §10 EStG deductions
- German income tax calculator — see the credit's effect on the tax bill
- Income-related expenses calculator — work-related deductions
- Home-loan calculator — combine renovation with mortgage planning