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With telework here to stay, tax officials eye changes to commuters' deductions, but unlikely to raise home-office deductions

The Taxpayers' Association of Finland is calling for changes in tax deductions for home offices, as teleworking is here to stay.

The official distance work recommendation will be lifted in mid-October, but many would like to continue to work from home, at least part-time (file photo of a teleworker in February 2021). Image: Emmi Korhonen / Lehtikuva

According to the Taxpayers' Association of Finland (TAF), the system of tax deductions for home offices should be overhauled due to the sharp – and apparently permanent – rise in working from home since the beginning of the Covid-19 pandemic.

Kati Malinen, chief legal officer at the taxpayers' lobby, argues that the current one-size-fits-all deduction system is no longer workable as the situations of those who work from home vary so greatly.

Under the current system, those who work from home for more than half the days in a year receive a standard home office deduction of 900 euros. Those who work remotely less than half-time automatically receive a deduction of 450 euros. In addition to this, specific telework-related purchases such as equipment and furniture can also be submitted for possible further tax deductions.

According to the taxpayers' group, today's working arrangements are too complex and variable to fit into this scheme.

Due to teleworking demands, "there are many wage-earners who have bought bigger homes, which really increases their costs. On the other hand, owners of detached houses and owners of housing shares are in different positions, as shareholders cannot deduct the purchase price of a work room," Malinen told Yle.

According to Malinen, increasing teleworking could also lead many to start calculating their actual costs and submitting itemised statements to tax authorities instead of opting for the standard deduction, which would increase the administrative burden on tax officials.

Determining the cost of work is tricky

The lump sum solution was made because of the difficulty of determining the real costs of the work itself when telecommuting. The present scheme is intended to be clear and simple for both taxpayers and authorities.

"It is made to compensate for the wear and tear on the home and equipment, which is difficult to calculate. It is also difficult to break down what else the premises at home are used for," explained Sami Varonen, Head Tax Advisor at the Tax Administration.

Even with the rise in teleworking, Varonen does not agree that home office deductions should be increased, as in his view the current compensation level is sufficient.

"The law stipulates that the actual expenses incurred in obtaining income may be deducted, and that tax officials interpret which ones may be deducted," he noted.

Varonen also points out that the tax administration has been rather permissive about allowing deductions for purchases such as additional monitors and desks. Malinen also notes this policy with approval.

Commuters' deductions may be revised

Instead of increasing the workroom deduction, Varonen is considering a reform of business travel deductions. These have been based on the cost of the cheapest public transport tickets available, which is simple and easy to determine.

"As teleworking becomes more widespread, this brings a new challenge. Now, it may no longer be the case that, for example, a monthly ticket is the cheapest. Recording and checking single tickets and work trips is really time-consuming, so may not make sense," he said.

Varonen even suggests that the tax deduction for commuting between home and work could be removed, but that deductions for longer, more expensive business trips should be kept in place.

According to Malinen, Varonen's suggestions toward simplifying travel expenses are welcome, but she points out that not everyone can work remotely.

"Their right to deductions must not be undermined," Malinen said.