How do I calculate the tax for my rental income on Flatio?
You often see stories about renting online and paying taxes in news headlines. You may be afraid that renting through Flatio does take special regulations into account. However, deciphering the taxation (or getting your sales records) for Flatio rentals is not as complex as it might seem at first.
NOTE: The following information is for landlords renting in the Czech Republic. Regulations for other countries will vary.
Reception types and accommodation features
When taxing rental income and deciding whether or not this income is subject to sales records (according to Act No. 112/2016 Coll. On the Registration of Sales), it is necessary to realize what form of rental you provide. The Income Tax Act (No. 586/1992 Coll., On Income Taxes, as amended, hereinafter referred to as the "ITA") distinguishes between two types of income - income from an independent activity and rental income.
Each form of rental accommodation has its own characteristics, from which it is relatively easy to infer to which category rental income falls. The most important feature of this assessment is the nature of the accommodation and the length of time for which the accommodation is rented. It is, therefore, necessary to assess whether you are renting for short-term and recreational purposes or for the purpose of securing a household. It is also necessary to consider any additional services that are provided with the lease, such as regular cleaning, catering services, bed linen change, etc. The type of accommodation from which the accommodation can be rented or from how the price is displayed.
So how can we distinguish accommodation service from rent for proper taxation and registration of sales? For a list of the characteristics of each type, see below.
Income from a trade or accommodation service
It is a way of doing business that is done on a trade license and is, therefore, part of your business. The character of this income includes the activities of hotels, motels, guest houses, or short-term accommodation in their own apartments/houses offered systematically through Airbnb platforms, Booking, etc.
- § 7 (1) (b) of the ITA - if you have the right to operate a trade
- § 7 (1) (c) of the ITA - if you have not been authorized to operate a trade.
It is also possible for a trade license to incur an obligation to record sales.
The most common features are as follows:
- accommodation is provided regularly or even repeatedly, for a short or transitional period,
- accommodation is most often offered on the Internet, e.g., for recreation,
- in addition to housing, services beyond the necessary services are provided, such as cleaning, linen change, catering, etc.,
- the tenant does not carry out routine maintenance or minor repairs alone,
- the price in the menu is displayed per day (or week).
Rental income or rent
Mostly this includes renting apartments or family houses for the purpose of long-term housing. If the leased property is not part of the business property, the income tax from these leases is set according to § 9 of the ITA, otherwise pursuant to § 7 of the ITA.
The most common features include the following:
- accommodation is arranged on a one-off basis, rather for a longer period of time and in order to ensure the tenant's (or his household's) housing needs, not for recreation purposes,
- the offer is also advertised once, for a longer period, both on the Internet and in the press or leaflets,
- In addition to accommodation, no other services beyond the necessary services are provided.
- The tenant contracts with the energy company his- or herself,
- the tenant performs customizations and minor repairs himself,
- the bid price is displayed for a month or a longer period of time.
There is no obligation to record sales for these revenues.
How do I tax rental income through Flatio?
This is just as simple as paying income tax from long term rental, so according to § 9 of the ITA (unless it is part of a business asset). Although some of Flatio's leases may fall into the income category, Flatio leases with rental income are more common. These leases are also exempt from VAT.
You can also read more about tax issues and their non-payment on our blog here.
Where can I get documents for taxation of this income?
The easiest way to get this information is to use the individual billing that Flatio generates for you on a monthly basis, in which you will find a clear breakdown of rents received from tenants along with landlord's fees (commissions for Flatio).
- Click on your name in the top right corner of My Rentals and go to the Billing statements under the My Profile section.
- Here you see all billing statements that have been generated to you so far, along with the related invoices, which you can view/download by pressing the PDF button.