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How is tax applied to rental income?
If a citizen wishes to rent a residential property under a rental agreement, how are their tax obligations determined? How much is the state duty for a rental agreement?
According to the State Tax Service under the Ministry of Economy, pursuant to Article 124.1 of the Tax Code, income earned from renting residential premises owned by individuals to other individuals is subject to a 10% withholding tax at source, except for hotels and accommodation facilities located in hotel-type properties.
Individuals registered with the tax authority who make the relevant payments are required to withhold the tax at source. The person responsible for withholding tax from rental payments at source must transfer the tax to the state budget no later than the 20th day of the month following the quarter in which the income was paid and submit the withholding tax return to the tax authority.
If the person paying the rent is not registered as a taxpayer, the individual renting out the residential property, or a tax agent appointed by them, must register with the tax authority as a taxpayer (obtain a VÖEN), calculate tax at a rate of 10% on the income earned from this activity, and submit an income tax return to the tax authority and pay the calculated income tax to the state budget no later than March 31 of the year following the reporting year.
The state duty for notarizing a rental agreement for residential property is 35 manats, while the service fee is 5.25 manats.
If a citizen wishes to rent a residential property under a rental agreement, how are their tax obligations determined? How much is the state duty for a rental agreement?
According to the State Tax Service under the Ministry of Economy, pursuant to Article 124.1 of the Tax Code, income earned from renting residential premises owned by individuals to other individuals is subject to a 10% withholding tax at source, except for hotels and accommodation facilities located in hotel-type properties.
Individuals registered with the tax authority who make the relevant payments are required to withhold the tax at source. The person responsible for withholding tax from rental payments at source must transfer the tax to the state budget no later than the 20th day of the month following the quarter in which the income was paid and submit the withholding tax return to the tax authority.
If the person paying the rent is not registered as a taxpayer, the individual renting out the residential property, or a tax agent appointed by them, must register with the tax authority as a taxpayer (obtain a VÖEN), calculate tax at a rate of 10% on the income earned from this activity, and submit an income tax return to the tax authority and pay the calculated income tax to the state budget no later than March 31 of the year following the reporting year.
The state duty for notarizing a rental agreement for residential property is 35 manats, while the service fee is 5.25 manats.