Apartment for rent

Apartment for rent

 

Question:
Hello!

I'm interested in the situation with renting an apartment. How are things with the taxes, who should pay them and what are the necessary documents that we need to provide?

Thanks in advance!

 

Answer:

Hello,

When renting, there are two options - long-term rent or rent for overnight stays. Since you did not mention which type it is, we will try to briefly describe them from a tax point of view.

1. Long-term rent - this means that you rent the property to a family to live in or to an office company. In this case, you will owe at the end of the year a 10% tax on realized income, reduced by 10% of legally recognized expenses.

2. When renting for overnight stays - the first thing you need to do is to categorize the property. This is done in the respective municipality where the property is located. From here you have several options for operation:

- patent - if the apartment has 2 or less stars you can, as an individual to pay annual patent tax (determined by the municipality and is different for each municipality). For the time in which the property is operated, the person who rents it must be self-insured and to declare and pay insurance.

- freelance profession - the tax you will owe is 10% on the amount of income, reduced by 25% of legally recognized expenses. Social security contributions are due again.

- company - if a company is registered and the property is operated through it, the tax will be 10% on the profit, which is formed by deducting from the realized income the expenses incurred related to the activity of the company. An additional 5% dividend tax is due when the realized profit is distributed to the owner of the company. Here, too, social security contributions are due.

The most profitable option from a tax point of view depends mainly on the amount of income and expenses related to the activity.

Another thing that is important to note is that if you rent the property for overnight stays through a platform type Booking / Airbnb, you will have to register for VAT according to. Art. 97a of the VAT Act (regardless of whether you operate the property as an individual or a company). The same will apply if you advertise your business via Facebook, Google or receive any other service from a legal entity established in the EU.

We hope we have been useful to you!

Greetings!