AADE is giving advice on what owners who have given a company or other individual the management of short-term rentals should pay attention to, to avoid mistakes that could cost them dearly.
In particular, in the new updated guide from the Independent Tax Authority on short-term rentals, which provides new clarifications on the institutional framework, obligations and taxation of the owners concerned, it is highlighted that the manager of a short-term rental property is defined as the natural or legal person or any type of legal entity, which carries out the process of publishing a property on digital platforms, for the purpose of short-term rental and generally takes care of the short-term rental of the property.
The administrator
In this context, based on the AADE guide in question, “Property Manager” can be:
–owner of the property or
–beneficiary or
–subtenant or
-third.
It should also be noted that the property owner or the usufructuary or subtenant, if he entrusts the management of his property to a third party for the purposes of short-term rental, is obliged to submit a Property Rental Information Declaration in which he will record the details of the property administrator, but if he does not do so, he will be considered the property administrator.
On the other hand, in the case of co-ownership of a property, when the property manager is one of the co-owners, the other co-owners are not required to submit a Property Rental Information Declaration.
In any case, however, the owner of the property or the usufructuary or the sublessor, if he leases a property with the right to sublease, continues to have the obligation to present the Declaration of Information on the Lease of the Property, in accordance with the written provisions.
It should be noted that the third party “Administrator” is exclusively the following cases: a) the guardian of a learned inheritance, b) the estate liquidator, c) the executor of a will, d) the judicial administrator, e) the temporary administrator, f) the guarantor, g) the administrator or guardian or judicial supporter or parent exercising parental care, as the case may be.
The obligations
With regard to landlords initiating short-term rentals, AADE stresses that they should be aware that they have the following basic tax obligations:
The Property Manager must:
1. be registered in the “Register of Short-Term Accommodation Properties” maintained by the Independent Public Revenue Authority (AADE).
2. Register the property in the special application for short-term rental properties on the AADE website and, specifically, in the “Short-Term Property Registry”. Registration in the Short-Term Accommodation Property Registry is carried out per rented property. With the registration of each property, a Property Registration Number (AMA) is granted.
3. It is mandatory to display the Land Registration Number in a prominent place on digital platforms, as well as on any display media, if it is disclosed through them.
4. submit a “Short-Term Residence Declaration” for each short-term rental. The deadline for each declaration is the 20th of the month following the day the tenant leaves the property and is submitted using the application form indicated above.
In the event of cancellation of a short-term rental and when, based on the cancellation policy, payment of the rent is expected by the tenant, a first “Short-Term Stay Declaration” must be submitted by the 20th of the month following the cancellation.
5. finalize the information registered in the “Register of Short-Term Accommodation Properties” by February 28th of the year in which the Income Tax Return is submitted, to determine the taxable income per income beneficiary.
Income tax
It is worth noting that income obtained by individuals from short-term rentals of up to two properties is income from real estate, provided that no services are provided, other than the supply of bed linen.
On the other hand, income obtained by individuals from short-term rentals of three or more properties is considered business income and is taxed on a progressive scale of 9% to 44% after deduction of business expenses, including maintenance and improvement expenses. In this case, the work must be initiated by the owner.
Income from short-term leases by entrepreneurs with three or more leased properties and legal entities is subject to VAT at a rate of 13%.
Particular attention should be paid within the scope of the AADE to the determination of the number of properties that an individual operates for short-term rental, since any other properties that the same individual operates exclusively outside the context of short-term rental are not taken into account. Thus, for example, in the case of an individual who owns four properties, two of which have been concluded with annual rental agreements and the other two have been registered in the Short-Term Accommodation Property Register to operate them for short-term rental, only the last two are considered available for short-term rental.