Providing private accommodation

Today, individual tourism is a popular way to spend a holiday. Lovers of such a holiday usually look for private accommodation and use various mobile applications. Private accommodation has its charm. The big advantage is that it usually offers a wide range of accommodation in different price ranges and of course with different comforts.

We were so interested in this issue that we contacted experts from the audit company A&D office, s.r.o to explain some issues.

1. Is it possible to provide private accommodation in one its own property without a trade license?

If the taxpayer rent real estate in the area of the Slovak Republic, or part of it (except for land), and is not registered with the locally competent tax office due to business or other self-employed activity, he is obliged to register by the end of the calendar month after the month in which he rented in the Slovak Republic real estate (Section 49a (2) of the Income Tax Act). This means that the person interested in renting, if he is not a self-employed person, must apply to the tax administrator for the assignment of a tax identification number (TIN). This operation is free of charge.

If a taxpayer rent real estate in the of the Slovak Republic, while he is already registered at the locally competent tax office due to the performance of business or other self-employed activity, he is not obliged to register or notify the tax administrator.

WARNING! For non-fulfillment of the registration obligation within the established period in accordance with § 155 par. 1 letter c) of Act no. 563/2009 Coll. on Tax Administration (Tax Code) and on Amendments to Certain Acts, as amended, fines from60€.

2. Can the landlord deduct the rental costs in the tax return?

If the leased property is not included in the commercial property by the taxpayer, he can claim as a tax expense only expenses for the proper operation of the property, such as energy expenditure, including expenditure on other services.

When income from the rental of real estate, energy means the supply of:

a) electricity,

b) heat for heating and domestic hot water,

c) drinking and domestic water,

d) gas.

Other services related to the rental of real estate are in particular:

a) drainage of wastewater from households,

b) lighting and cleaning of common areas in the house,

c) use of an elevator,

d) inspection and cleaning of chimneys,

e) removal of ash, rubbish and sewage,

f) cleaning of cesspools,

g) equipping the apartment with a common television and radio antenna,

h) internet.

In such a case, it cannot include e.g. nor expenses for real estate insurance, real estate tax, contribution to the repair and maintenance fund, etc.

3. How is income from such a lease taxed?

In the tax return, the income is stated as income according to § 6 paragraph 3 of the Income Tax Act. No social or health insurance is paid from income from the rental of real estate according to § 6 paragraph 3 of the Income Tax Act (excluding trade).

4. Is it possible to reduce the tax base on such income?

Exemption of rental income according to § 6 par. 3 of the Income Tax Act is regulated in § 9 par. 1 letter g) of the Income Tax Act. According to this provision, income is exempt from personal income tax according to § 6 par. 3 and § 8 par. 1 letter (a) of the Income Tax Act, if the sum of such income does not exceed 500 EUR in the tax period, and if the income thus defined exceeds 500 EUR, only income in excess of the amount thus determined shall be included in the tax base; Expenditure to income included in the tax base is determined by the same ratio as the ratio of income included in the tax base to total income.

In the event that the leased property is in the non-share co-ownership of the spouses, the taxpayers (spouses) may share the achieved rental income in the same proportion or in another agreed ratio that is more advantageous for them. In the same proportion, they will share the income-generating expenses, both of which will claim an exemption of 500EUR.

5. What else can not the landlord forget?

In municipalities where the General Binding Regulation on overnight stay tax is accepted, it is necessary to pay it.

Accommodation taxpayer - Accommodation taxpayer is a natural person who is temporarily staying in the facility. The taxpayer for the accommodation tax is e.g. business traveler accommodated in a hotel, tourist accommodated in a cottage settlement or tourist hostel, holidaymaker accommodated in a boarding house, in private, etc. provided that it is temporary accommodation.

Tax base and tax rate - The number of overnight stays in a facility providing temporary accommodation is essential to determine the tax base for accommodation. The tax rate is determined by the municipality in euros per person and overnight stay. The amount of the tax rate is left to the Act on Local Taxes exclusively in the competence of the tax administrator, while it allows for the establishment of different tax rates for parts of the municipality or for cadastral territories. Part of the municipality is regulated by § 2 par. 2 of Act no. 369/1990 Coll. on Municipal Establishment, as amended, and on Amendments to Certain Acts (hereinafter referred to as the "Act on Municipal Establishment"). According to the provision in question, part of the municipality has its own name, part of the municipality does not have to have its own cadastral area.

Collection of tax - The taxpayer is the operator (owner) of the property, which provides paid temporary accommodation. The taxpayer does not pay the accommodation tax to the tax administrator but to the operator of the facility, who pays the collected tax to the municipality. It is not decisive for the collection of the accommodation tax whether the taxpayer has a trade license to perform this activity.

6. Is it possible to use recreational vouchers for private accommodation?

Holiday vouchers are a tool that can be used for recreation in Slovakia. Act no. 91/2010 on the promotion of tourism determined the conditions (§152a) that must be met in order for the employer to pay the holiday voucher to his employee. The basic condition is at least 2 overnight stays in the facility, the issuance of an invoice with an unambiguous designation of the employee for the overnight stay, as defined by the Labor Code, and payment should be made through the bank account of the overnight stay provider. At the same time, the accommodation provider must pay the overnight tax to the local government.

7. Why is it advantageous for the property owner to admit the accommodation of persons in his property?

In Slovakia, it is customary to provide accommodation for payment in a cache. I will not emphasize that it is beyond the law. I focus on the benefits. I don't need a trade license. It is necessary to register and assign a VAT number. I can claim a deduction of 500 EUR in my tax return, as well as part of the costs associated with the operation of the property. I can participate in applications providing accommodation reservations, respectively. I can use advertising for promotion. The possibility of using recreational vouchers is also interesting. You just have to fulfill above conditions.

This form of accommodation is especially suitable in a locality where there is insufficient capacity of accommodation. It is fast, easy to implement and efficient. Positive examples can be found in tourist attractions, where it has been operating for several decades (e.g. Zuberec - Roháče).