About this good practice
The aim of the household allowance is to replace normal domestic and care work in the home, as well as maintenance and renovation work in the home and leisure dwelling, with market work, thereby increasing demand for and employment in household services. The reduction also aims to reduce the informal economy in the provision of household services and to promote the self-maintenance of dwellings. According to the government programme, the household allowance also includes the inclusion of planning costs for energy renovations and the application of a higher deduction rate for renovations to improve energy efficiency or to move away from fossil heating systems, so consumers will be able to take advantage of the household allowance for energy-efficient maintenance and renovation investments in their homes. The tax credit for household expenses reduces the amount of tax you must pay. You can claim the credit if you pay for work to be done in your home. In 2022, one person can receive a household allowance of €2,250 to €3 500. The maximum amount can be received for household, care, and maintenance work and for giving up oil heating. The household allowance is only available for the work component, and you could deduct 40% of the labour component if you bought the work from a company. The main stakeholders in this practice are the tax administration and the Parliament. The beneficiaries of this are ordinary citizens in Finland who pay taxes and can deduct measures from them.
In 2020, the amount of household tax credits granted was €386 million.
Evidence of success
The household allowance is most used for renovations. In 2020, of the costs eligible for the household credit 79% were related to renovation services, 18% for household work, and 3% for care and nursing services . There were 439 750 recipients of the household allowance in 2020.
Potential for learning or transfer
The Household Tax Credit reduces the informal economy and increases employment. Finland aims to reduce the carbon footprint of housing and construction. The way forward is to explore the inclusion of planning costs for energy renovations in the household tax credit, the possibility of a deduction for shareholders in housing companies, and the application of a higher deduction rate for renovations to improve energy efficiency or to move away from fossil heating systems. This can work in other regions if the tax law is similar Citizens can invest more cheaply in their own home if they work during the day and pay taxes. Paying taxes can feel more beneficial to people when you can reduce your taxes by increasing the value of your home.