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Lodger tax to be introduced? – The Ministry responds
napi.hu, 12.09.2016 – Rumours of a new “lodger tax” have been spreading lately, so the Ministry of National Economy issued a bulletin to set the situation straight. The letting of apartments has been subject to income tax since more than 25 years, so there is no news here. The rules are clear: offering your apartment for lease through an online accommodation marketplace qualifies as a taxable accommodation operation and the landlord must have a tax number and register with the local notary public. Letting an apartment or part of it for the long term, e.g. to a lodger, is also subject to tax, but the landlord does not need to have a tax number.
According to the Ministry the online accommodation marketplaces undoubtedly created new opportunities for Hungarian landlords. The National Tax and Customs Authority started a systematic analysis of the situation back in the spring of 2016. Based on the data collected from just a single online marketplace they found that in May there were 8299 properties offered by 5206 landlords.
How to calculate profit before tax from a long-term apartment lease?
napi.hu, 13.09.2016 – There are two ways to calculate profit before tax from a long-term apartment lease. First, the landlord can deduct every verifiable cost item (cost of utilities, renewal expenses etc.) and depreciation from the revenue earned.
Second, the landlord can deduct a flat-rate 10 per cent cost ratio from the revenue earned. A tax advance shall be paid on a quarterly basis and the revenues shall be entered into the tax return under “revenue earned from non-employment activities”. The tax rate is 15 per cent. If in any tax year a private person’s revenue earned from property rental exceeds HUF 1 million, then 14 per cent social security contribution must also be paid.
Do landlords need a tax number?
napi.hu, 06.09.2016 – According to a bulletin issued by NAV, the Hungarian Tax Authority recently, no tax number is needed for landlords offering their property for a long-term lease, unless they are legal entities with a compulsory tax number. As the lease of properties for non-touristic purposes by private persons is exempt from VAT, no invoice needs to be issued for the rental fee – a receipt or any other form of verifiable record will be sufficient.
Touristic accommodation services, on the other hand, fall into the category called “other types of accommodation” and involve a formal business activity, mainly the provision of short-term accommodation and related services. Property owners have a choice of several forms of business and taxation methods. Most of them do so as private persons and must apply for a tax number and also register with the local notary public.