According to the Finnish Association of Taxpayers (TAF), the tax deduction system for home offices needs to be reformed, because the sharp and apparently permanent increase in working from home is due to the beginning of the Covid-19 pandemic.
Kati Malinen, the general counsel for the taxpayers’ lobby, argues that the current one – size – fits – all deduction system is no longer working because the situation of those working from home varies greatly.
Under the current system, those who work from home more than half a day a year receive a standard home office deduction of € 900. Those who work remotely for less than half time will automatically receive a € 450 deduction. In addition, certain telework-related purchases, such as equipment and furniture, may be made for possible additional tax deductions.
According to the Taxpayer Group, the current working arrangements are too complex and varied to fit into this system.
Due to teleworking requirements, "many wage earners have bought larger homes, which really increases their costs. On the other hand, owners of detached houses and flats are in different positions because shareholders cannot reduce the purchase price of a study," Malinen told Yle.
According to Malinen, the increase in teleworking may also lead many to start lowering their actual costs and provide detailed statements to the tax authorities instead of opting for the usual deduction, which would increase the administrative burden on tax officials.
Determining the price of work is tricky
The lump sum solution was made because it was difficult to determine the actual cost of the work in telework. This system is intended to be clear and simple for both taxpayers and public authorities.
"It compensates for the wear and tear of the home and appliances, which is difficult to calculate. It is also difficult to break down what other spaces are used at home," explained Sami Varonen, Tax Advisors.
Although teleworking is increasing, Varonen does not agree that home office deductions should be increased because he believes the current level of compensation is sufficient.
"By law, actual expenses incurred in obtaining income can be deducted and tax officials interpret deductible income," he noted.
Varonen also points out that the tax administration has been quite positive about allowing deductions for purchases such as additional monitors and tables. Malinen also endorses this practice.
Deductions for commuters can be checked
Instead of increasing the workroom reduction, Varonen is considering renewing business travel reductions. They are based on the price of the cheapest public transport tickets, which is simple and easy to determine.
"As teleworking becomes more common, this brings a new challenge. Now, it may no longer be the case that a monthly ticket, for example, is the cheapest. Saving and checking individual tickets and business trips is really time consuming, so it may not make sense," he said.
Varonen even suggests that the tax deduction for commuting between home and work could be abolished, but deductions for longer, more expensive commutes should be maintained.
According to Malinen, Varonen’s proposals to simplify travel expenses are welcome, but he points out that not everyone can work remotely.
"Their right to deduct must not be impaired," Malinen said.