This was announced by Federal Labor Minister Hubertus Heil (SPD) a few days ago. “I have a technical solution in mind, for example in the form of an app that can be used to book a domestic help who is subject to social security contributions from a service provider without any bureaucracy,” said Heil.
The bureaucracy of legally registering a worker and the cost are what put many people off. They prefer to pay in cash. But there are dangers.
On the one hand, there is no accident insurance and “in the case of undeclared work, both sides are usually prosecuted. The household help who has evaded income tax and possibly sales tax is threatened with criminal proceedings for tax evasion. The private employer who has not paid any social security contributions has to pay a fine,” says Daniela Karbe-Gessler, tax expert at the Association of Taxpayers (BdSt). For private employers, the fine is 5,000 euros.
This can be prevented with self-employment. “Anyone who receives bills from them and transfers them has done everything to prevent undeclared work and cannot be legally prosecuted if their household help does not correctly tax their income,” explains Karbe-Gessler. But only a few assistants are self-employed.
Up to 180 euros tax advantage for a mini-job in the household
Employing someone legally with taxes and social security contributions is usually more expensive than the illegal way, as long as everything goes well. But not always. There are ways for private employers to deduct household help from tax. Under certain circumstances, savings can already be made today for the client for the same wage for the household help without a cost subsidy.
The following example shows this: A cleaning lady is employed in a family as a mini job. She receives an hourly wage of 18.50 euros and works ten hours a month. This means that her wages per month are 185 euros. You can keep it gross for net. The family has to pay ancillary wage costs of 14.8 percent for flat-rate tax and social security contributions, making them €212.50 in labor costs per month. At first glance, legal employment costs the family 27.50 euros more per month, which is 330 euros per year.
However, 20 percent of the costs can be deducted directly from the tax liability via the tax return. The family thus receives a refund from the tax office of 2550 euros x 20 percent = 510 euros of the total annual costs for their cleaning lady. The legal employment thus brings a cost advantage of 510 – 330 = 180 euros.
Narrow requirements for mini job
A domestic help employed in this way has a legal right to vacation, notice periods and minimum wage. She is covered by statutory accident insurance and receives continued payment of wages in the event of illness or pregnancy. The private employer must continue to pay the wages, but can be reimbursed 80 percent of the costs in the event of illness and 100 percent in the event of pregnancy. This is because special insurance is included in the ancillary wage costs.
The cleaning lady in the example may also have a second or third mini-job in other households. It is only important that their total earnings from the mini-jobs do not exceed the limit of 450 euros. In addition to a main job subject to social security contributions, only a mini-job can be exercised.
All other mini-jobs are subject to social security contributions and added to the main job. After that, employers must ask beforehand. This is also checked by the mini-job center, where all mini-jobs are registered.
If the cleaning lady exceeds the 450-euro limit in one or with the total number of her mini-jobs, it is an employment that is subject to social security contributions, for which both sides have to pay taxes and duties that are significantly higher than those of the mini-job. In addition, there is the bureaucratic effort for the private employer, who has to report the employment relationship to the employee’s health insurance company and then has to do the payroll accounting himself. If there are several employers, it quickly becomes confusing.
Tax benefits for the self-employed and agency workers
For the family from the above example, it is not worthwhile for tax purposes to hire another mini-jobber in addition to the cleaning lady. Because: “Anyone who employs someone marginally in the household can get back a maximum of 510 euros of the wage costs via the tax return,” explains Karbe-Gessler.
If you also need a gardener, for example, you have to employ them in other ways. “For domestic help who is employed subject to social security contributions or who are self-employed, the maximum tax benefit is 4,000 euros,” says Karbe-Gessler.
One variant is to hire a gardener in the household. This must be reported to your health insurance company. If his salary is a maximum of 1,300 euros, he will have to pay lower taxes – the family, however, pays the usual 50 percent of social security costs. In addition, there is wage tax, which must be paid to the tax office either as a lump sum or according to the wage tax class of the gardener.
Alternatively, the gardener can also be employed by an agency and booked through them. Then the agency is the employer and the family is just the contractor. The agency writes invoices. The family can claim 20 percent of the wage costs in the tax return as household-related services. The same applies if the gardener is self-employed and writes invoices for his services.
More: Data exchange and account inquiries – how the tax office catches tax evaders