HOW to TAX RENTAL income?
Do you need a trade license?
What is difference between Accommodation services and Lease?
Income from accommodation services (Trade license required)
- accommodation is provided regularly/repeatedly
- accommodation is provided for short time span (days, weeks) or temporary (for limited time)
- accommodation in that form is offered on Internet, or otherwise (newspapers, leaflets, billboards, etc.)
- accommodation is provided for example for recreational purposes
- in addition to essential services related to “habitation”, other services like cleanup of a room in use, change of bedding, providing breakfast, etc., are provided
- accommodated person doesn’t participate in routine maintenance or minor repairs of the room in use
- price of service uses “per day” or “per week” format
Provider of accommodation services has to have a trade license. Also, if you use services like Airbnb or booking.com, you need VAT light registration, because VAT is paid from the service fees paid to Airbnb/booking.com.
You tax this income under the trade license income. You can use 60% deduction to this income.
Income from lease
- lease is arranged once and for long period of time (months, year)
- this way it is advertised (on Internet, in newspapers, leaflets)
- lease is offered primarily for securing housing needs of a tenant (his or hers household)
- it is not provided for recreational purposes
- lessor does not provide additional services
- utilities (electricity, water, gas) are usually arranged by the tenant himself/herself
- the tenant does routine maintenance and minor repairs of rented space
- price of the lease uses usually “per month” format, eventually longer period
You don’t need a trade license to provide lease. When calculate tax base from lease you can use real expenses or 30% lump sum deduction. The tax is 15% from the tax base.