Tax regulation mechanism I (Tax reductions for household works)
Updated: 17.01.2019
Author: Oskar Vågerö
Act No. 2009:194 establishes rules for the income tax deduction of installation works in apartments and single-family houses. Eligible measures are the installation of renewable energy devices and the replacement of conventional heating sources with renewable ones.
Only the labour costs are deductible. The costs of materials, administrative costs and other expenses related to the installation are not eligible.
There are two possible ways to benefit from the reduction. The person commissioning eligible installation works may deduce the eligible costs from his/her income tax at the beginning of the following year or he/she can apply for a provisional tax credit that the tax authority pays before the costs have to be covered. In the latter procedure, the amount of reduction paid will be offset against the income tax the eligible person has to pay at the beginning of the following year.
Eligible technologies
The website of the tax authority (Skatteverket) provides a list of examples of eligible installation works.
In apartments: https://www.skatteverket.se/foretagochorganisationer/skatter/rotochrutarbete/rotarbeten/rotarbetenibostadsratt.4.5c1163881590be297b55977.html
In single-family houses: https://www.skatteverket.se/foretagochorganisationer/skatter/rotochrutarbete/rotarbeten/rotarbetenismahus.4.2ef18e6a125660db8b080001478.html#El
As for heating from renewable energy sources, only heat pumps and solar panels are eligible.
Aerothermal energy
The installation or replacement of a heat pump in both apartments and single-family houses is eligible for the tax allowance.
Hydrothermal energy
The installation or replacement of heat pumps in both apartments and single-family houses is eligible for the tax allowance.
Geothermal energy
The installation or replacement of a heat pump in both apartments and single-family houses is eligible for the tax allowance.
Solar thermal energy
The installation of or the replacement of conventional heating installations with solar panels in single-family houses is eligible for the tax allowance.
Amount
The tax reduction can cover 30% of the labour costs but shall not exceed SEK 50 000 per year (€ 4,858) (§§ 7 and 17 Act No. 2009:194).
Addressees
According to the tax authority, the person eligible for the tax reduction must own and reside in the apartment or house where the work was conducted.
Procedure
Process flow
Tax reduction may be claimed in two ways:
In order to benefit from the regular tax allowance,
the claimant has to electronically make a request for the allowance to the tax authority by 31 January of the year following the tax year in which the work was paid for (§ 8 Act No. 2009:194).
The tax authority shall, without delay, decide on whether or not tax reduction is granted (§ 11 Act No. 2009:194).
In case of preliminary tax credit, the person who has commissioned the installation works must apply for the pre-payment of the tax credit to the tax authority. The authority then pays the credit. If afterwards the tax authority decides that the preliminary payment was too high, the recipient of the credit must pay back the surplus amount (§ 17 Act No. 2009:194).
In both cases, the installation works must have been completed and the labour costs must have been paid prior to application for tax allowance/credit (§ 8 Act No. 2009:194).
Competent authority
The Swedish Tax Authority (Skatteverket) (§4 Act No. 2009:194).
Distribution of costs
State
The costs of the tax allowance scheme are borne by the state.