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How much tax must an individual entrepreneur pay on the rent of an apartment leased from a private individual?
How much tax must an individual entrepreneur pay on the rent of an apartment leased from a private individual?
I am an individual entrepreneur and have rented an apartment from a private individual (citizen). Under a contract, I have subleased this apartment to a legal entity for the accommodation of its employees. The apartment is used for its intended purpose. I would like to know: when an individual entrepreneur pays rent to a private individual, should tax be withheld at source at a rate of 10 percent or 14 percent?
The State Tax Service under the Ministry of Economy has stated that, in accordance with Article 124.1 of the Tax Code, income obtained from the lease of movable and immovable property is subject to withholding tax at a rate of 14 percent. However, income obtained from leasing residential premises owned by private individuals to private individuals (excluding hotels and accommodation facilities located in hotels and hotel-type establishments) is subject to withholding tax at a rate of 10 percent. Pursuant to Article 150.1.6 of the Tax Code, legal entities, entrepreneurs, and private individuals earning income from non-entrepreneurial activities who make the payments specified in this article are obliged to withhold tax at source. The person required to withhold tax at source on rental payments 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 rental payment is made by a private individual who is not registered as a taxpayer, the lessor himself or the tax agent appointed by him shall pay the tax in accordance with this article at a rate of 14 percent (in relation to lease) or 10 percent (in relation to residential rent) and, in accordance with Articles 33 and 149 of the Tax Code, register for tax purposes and submit a tax return.
Legal basis: Articles 124 and 150.1.6 of the Tax Code.
I am an individual entrepreneur and have rented an apartment from a private individual (citizen). Under a contract, I have subleased this apartment to a legal entity for the accommodation of its employees. The apartment is used for its intended purpose. I would like to know: when an individual entrepreneur pays rent to a private individual, should tax be withheld at source at a rate of 10 percent or 14 percent?
The State Tax Service under the Ministry of Economy has stated that, in accordance with Article 124.1 of the Tax Code, income obtained from the lease of movable and immovable property is subject to withholding tax at a rate of 14 percent. However, income obtained from leasing residential premises owned by private individuals to private individuals (excluding hotels and accommodation facilities located in hotels and hotel-type establishments) is subject to withholding tax at a rate of 10 percent. Pursuant to Article 150.1.6 of the Tax Code, legal entities, entrepreneurs, and private individuals earning income from non-entrepreneurial activities who make the payments specified in this article are obliged to withhold tax at source. The person required to withhold tax at source on rental payments 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 rental payment is made by a private individual who is not registered as a taxpayer, the lessor himself or the tax agent appointed by him shall pay the tax in accordance with this article at a rate of 14 percent (in relation to lease) or 10 percent (in relation to residential rent) and, in accordance with Articles 33 and 149 of the Tax Code, register for tax purposes and submit a tax return.
Legal basis: Articles 124 and 150.1.6 of the Tax Code.