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Denmark: Government Agreement Reached to Restore Tax Deduction for Remuneration for Household Services

(July 2, 2015) Denmark’s Ministry of Taxation announced on June 29, 2015, that a scheme for deducting remuneration for certain household services, referred to as BoligJobordning (household employment scheme), which had been abolished as of January 1, 2015, has been reintroduced, with retroactive effect from that date of abolition. The government had reached agreement on the measure with several key Danish political parties. (Laura Ambagtsheer-Pakarinen, Denmark: Deductibility of Remuneration for Certain Household Services Reintroduced with Modifications, TAX NEWS SERVICE (June 30, 2015), International Bureau of Fiscal Documentation online subscription database.) The kinds of paid services for which taxpayers may take a deduction include cleaning, babysitting, gardening, and renovating. (Id.)

The broad political agreement, which will allow the deduction for the tax years 2015-2017, will in the last two years have a “greener” profile to better support the green transition, increased sustainability, and actions to solve climate change, the agreement stated. According to the Minister of Taxation, Karsten Lauritzen, a green BoligJobordning will make it more attractive for Danes to renovate their homes to make them more energy-saving. (Press Release, Bred aftale om genindførelse af BoligJobordningen [Broad Agreement on the Restoration of BoligJobordningen], Skatteministeriet [Danish Ministry of Taxation] website (June 29, 2015) [scroll down to link to Agreement Between the Government and the Danish People’s Party, the Alternative, SF [the Socialist People’s Party] and the Conservatives on a BoligJobordning in 2015-2017 [Agreement] (in Danish)].)

The fundamental change in the BoligJobordningen deduction scheme to support a greener society begins in 2016. As of that year, the deduction will be disallowed for those types of work that do not have a green aspect; at the same time, the deduction will be maintained for those services that counteract “black” (undeclared) work. (Id., Agreement.)

In 2015, the maximum deduction under the household services remuneration scheme is DKK15,000 (about US$2,234) per person. In the following two years, it will increase to DKK18,000 (about US$2,680), but will be divided into two tiers: general services (such as babysitting), with up to a DKK6,000 deduction, and craft services (such as renovation work), with up to a DKK12,000 deduction. The two types of deductions can both be used in the same year. (Ambagtsheer-Pakarinen, supra; Agreement, supra.)