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Tax and social insurance obligations of an individual on rental income
Tax and social insurance obligations of an individual on rental income
We inform you that when rental payments are made to an individual by persons registered as taxpayers, the tax obligation on rental income is fulfilled at the source of payment by the tenant, at a rate of 14%. If the individual’s income is derived solely from rental activity, there is no obligation to register for tax purposes or to submit a tax return.
However, if the person paying the rent is not registered as a taxpayer, then the landlord — the individual — must register with the tax authority as a taxpayer (obtain a TIN) and calculate the tax at the rate of 14% on the income derived from this activity. The individual must also submit an “Income Tax Declaration” to the tax authority no later than March 31 of the year following the reporting year and pay the calculated amount of income tax to the state budget within that period.
According to the rental agreement, 14% income tax must be withheld from the specified amount, and the remaining amount shall be paid to the landlord.
At the same time, according to paragraph 12 of Article 15 of the Law of the Republic of Azerbaijan “On Social Insurance,” mandatory state social insurance contributions are not calculated on income not related to salaried employment or entrepreneurial activity (such as interest income, dividends, income from renting property, royalties, income from the disposal of assets not used for entrepreneurial purposes, the value of gifts and inheritance, and cash prizes won from betting on sports games, lotteries, and other competitions or contests).
We inform you that when rental payments are made to an individual by persons registered as taxpayers, the tax obligation on rental income is fulfilled at the source of payment by the tenant, at a rate of 14%. If the individual’s income is derived solely from rental activity, there is no obligation to register for tax purposes or to submit a tax return.
However, if the person paying the rent is not registered as a taxpayer, then the landlord — the individual — must register with the tax authority as a taxpayer (obtain a TIN) and calculate the tax at the rate of 14% on the income derived from this activity. The individual must also submit an “Income Tax Declaration” to the tax authority no later than March 31 of the year following the reporting year and pay the calculated amount of income tax to the state budget within that period.
According to the rental agreement, 14% income tax must be withheld from the specified amount, and the remaining amount shall be paid to the landlord.
At the same time, according to paragraph 12 of Article 15 of the Law of the Republic of Azerbaijan “On Social Insurance,” mandatory state social insurance contributions are not calculated on income not related to salaried employment or entrepreneurial activity (such as interest income, dividends, income from renting property, royalties, income from the disposal of assets not used for entrepreneurial purposes, the value of gifts and inheritance, and cash prizes won from betting on sports games, lotteries, and other competitions or contests).