New moonlighting rules take effect in 2013
Tax authority hopes to clarify when doing a good deed turns into a taxable income, but experts say it will be impossible to eliminate the grey zone
The rules about working under the table, or earning ‘black money’, as it is sometimes called, can be tough to sort out. The tax authority, Skat, hopes that rule changes taking effect as of January will help clarify some of the confusion.
The new rules especially lend a hand to those under 16 and old-age pensioners that are trying to make a few extra kroner.
Those under 16 are not required to pay taxes as long as they are working in someone else’s home, while people in retirement get the same break on the first 10,000 kroner they earn in a year.
Pensioners are required to pony up on any income earned above that threshold, and if they are receiving a state pension, the pension will be reduced if they earn more than 30,000 a year.
Along with the new rules for private work, there are some new statutes in place for registered businesses.
Vehicles with yellow commercial number plates will be required to have a company logo clearly displayed on both the right and left sides.
In addition, most construction sites on private land will be required to display a sign that clearly shows which companies are working there.
What is less clear, is when the line between helping out friends and family becomes a case for the taxman.
“Especially when it comes to work in other’s homes, people have been unsure whether to involve the tax authorities,” Bo Sandmann Rasmussen, an economics professor at the University of Aarhus, told Jyllands-Posten newspaper.
On its website, Skat says that, in principle, work done amongst friends does not need to be declared, so long as the service does not represent a “significant economic benefit” to the recipient.
“Exactly where the boundary lies is uncertain,” said Rasmussen. “I have heard tax agents say that you can help a neighbour build a carport, even though it could be worth as much as 30,000 kroner. “
Although the rules say that work done amongst friends cannot be done in exchange for other services and no money can change hands, Rasmussen said it is almost impossible to draw a line between working under the table and taxable work between family and friends.