Short term rentals and taxes
In recent years, mainly due to the success of portals such as AirBnB or Booking, a quite specific type of rental has developed significantly. Of course, we are talking about a short-term rental, which breaks records of popularity, especially in places visited by tourists.
Revenue earned during the high season often exceeds the annual revenue earned from traditional full-year rentals. If we decide to rent our apartment to tourists and look for a tenant with whom we sign a contract in the off-season, we can even double our profits.
DOES CONDUCTING SHORT-TERM RENTALS REQUIRE AN ECONOMIC ACTIVITY?
Everything, as usual, depends on the interpretation of the Tax Office. While long-term rental and occasional, non-regular, renting a flat does not constitute the basis for the necessity to register a business, according to the regulations, regular and cyclically repeated short-term rental does not.
According to the definition (Article 2 of the Act on freedom of economic activity), gainful activity performed in an organized and continuous manner (seasonality does not exclude continuity) is treated by the tax office as business activity and its conduct carries all the related consequences .
This is confirmed by numerous tax interpretations and jurisprudence of administrative courts, which unequivocally state that income obtained from short-term rental cannot be treated in the same way as that obtained from private rental.
This situation is of great importance when it comes to taxes that we pay on earning such revenues.
WHAT TAX WILL I PAY ON SHORT-TERM RENTAL?
If our income is obtained from private rental (year-round rental), we will pay a flat tax rate on them.
In the case of a short-term rental, we should choose one of the available forms of taxation:
- Tax deduction card (if the total number of rented rooms does not exceed 12),
- a flat rate of 17%
- tax on general terms with rates of 18 or 32%,
- flat tax at 19%.
- Of course, there may also be a situation when our rental is mixed and in the high season meets the characteristics of a short-term rental, and outside it is rented for longer periods. Then, as indicated by the tax interpretations issued so far, all revenues should be treated as obtained from running a business.
We would like to emphasize that the interpretation of a given Tax Office is decisive, therefore, if we have any doubts, we should ask for an opinion of the tax authority responsible for us.
VAT AND REAL ESTATE TAX
There are also important differences here. Short-term rental is subject to the 8% VAT rate and in this case we cannot take advantage of the exemption applied in long-term rental (i.e. Art. 43 (1) (36) of the Act, according to which services in the field of renting residential real estate are exempt from tax). However, we can take advantage of the subjective exemption if our turnover does not exceed 200 thousand. PLN annually.
Additionally, you should remember to change the method of calculating real estate tax, which in the case of premises related to running a business is charged at a different, higher rate.
OR THROUGH AN INTERMEDIARY?
How then to take advantage of the advantages of a short-term rental without a significant increase in costs? It is worth considering the offers of managing our apartment by a professional broker.
Of course, as we wrote earlier, each case is worth considering individually and applying for an appropriate opinion to our Tax Office, but the rulings of administrative courts issued so far (especially the judgment of the Provincial Administrative Court in Warsaw of May 24, 2018 (file reference number III SA / WA 2343/17) confirm that entrusting the rental of an apartment to a professional broker exempts the owner from the need to conduct business activity. / p>
BillBerry Apartments provides professional rental services for flats and apartments, both in the long and short term. Please contact us - we will be happy to answer your questions and advise you on the best solutions.
We invite you to take advantage of our short-term apartment rental offer: