Is renting via the Internet a business?
It might seem that short-term renting of a house (e.g. for a week) does not constitute business income. The regulations, however, contradict this view. Renting via the Internet, providing accommodation is an economic activity.
Types of lease
Among the leases we can distinguish:
long-term rental - it is a rental for residential purposes and, as the name suggests, it serves the housing needs of the landlords. There is no doubt here that such rental can be carried out privately or as a business. It is up to the landlord to decide;
short-term rental - it is a rental for days, days, weeks. It is not a rental for housing purposes, but providing "accommodation" to tourists for a few days, weeks;
occasional rental - it is a rental for residential purposes, a stay for a specified period of no more than 10 years. The definition of an occasional lease can be found in Art. 19a of the act on the protection of the rights of tenants. From this definition, it can be concluded that the occasional lease is a type of long-term lease and not - as it might seem - a type of short-term lease.
The rental may be conducted as part of a business or privately. When it is run as part of business activity, the available forms of taxation are general rules with a rate of 18% / 32%, a tax card, a flat tax with a 19% rate or a flat rate with a 17% rate - for the rental of residential buildings classified under PKWiU code 55.20. Code 55.20 covers tourist accommodation establishments and short stay accommodation. Hence, the flat rate 17% cannot be taxed on residential rental business because residential rental is long-term.
Rental for residential purposes (long-term) as part of the activity should be classified under the symbol 68.20 PKWiU: "Rental and management of own or leased real estate." This category includes, among others, rental of houses, flats and apartments, including furnished, for a longer period of use , ie on a monthly or annual basis This section does not include accommodation services in hotels, summer houses, rental of guest rooms, campsites, campsites and other facilities and accommodation for short stays, as these are included in the PKWiU 55.20 code.
Rental may also be carried out privately, not as a business. The available forms of private rental taxation are the general rules with a rate of 18% / 32% and a flat rate with a rate of 8.5%.
In the further part of the article, we will deal with short-term rental (also known as daily rental) via the Internet, because nowadays many enterprising people make extra money in this way, sometimes without even realizing that they run a business.
Why is renting via the Internet an economic activity?
Both long-term rental and short-term rental constitute rental income, i.e. PIT (sometimes VAT) must be paid on it, however, depending on the type of rental, taxation will be different. Long-term leases can be taxed as private (flat rate 8.5% or general 18% / 32%) or as part of a business (flat rate 17%, general 18% / 32% or flat 19%).
On the other hand, short-term rental (also referred to as rental for days) is - in the light of the case law of the tax authorities - an economic activity. This shows that persons providing their accommodation are engaged in economic activity (it does not matter that they have not registered it, because the fact that they are running does not prove their registration, but the nature of the activities performed).
In order to define what an economic activity is, the offices make use of Art. 5a point 6 of the PIT Act, which reads (...) economic activity or non-agricultural economic activity - this means a gainful activity:
a) manufacturing, construction, trade, services,
b) consisting in searching for, identifying and extracting minerals from deposits,
c) consisting in the use of things and intangible assets
- conducted on its own behalf, regardless of its result, in an organized and continuous manner, from which the revenues obtained are not included in other revenues from the sources listed in art. 10 sec. 1 points 1, 2 and 4-9.
Offices interpret this provision to mean that if any activity is carried out for profit, in an organized and continuous manner - it is an economic activity.
Therefore, renting via the Internet is an economic activity. The tax office indicates that it is:
organized activity - because you have to take some actions, such as placing photos of the apartment on the website, commission fee for a website intermediating in renting a flat, using an organized structure - a specialized rental agency,
continuous operation - because it is not a one-time accommodation, but extends over time, it is cyclical,
gainful activity - the activity is undoubtedly focused on profit.
It is worth noting that short-term rental (and therefore business activity) also includes renting rooms to students for 10 months, and renting rooms to tourists. If accommodation were only rented to students, then such a rental could qualify as private rental. However, since a given accommodation is made available to guests for two months, such a rental is already an economic activity, because it is an organized, continuous, profit-oriented activity - and this rental is not a rental for residential purposes. And since a person rents someone a flat for purposes other than living, he must do it as part of his business.
Short-term rental should be classified under the symbol 55.20 PKWiU "Tourist accommodation and short-term accommodation facilities". This category includes, among others accommodation on a daily or weekly basis in specially separated, furnished rooms or rooms allowing for living, preparing meals and sleeping, or with conditions for cooking or equipped kitchens.These can be rooms, apartments or flats in multi-storey buildings or complexes of buildings, summer cottages or mobile homes. Minimum services accompanying the accommodation may be provided. This class covers the provision of short-term accommodation in:
summer camps and other holiday recreation facilities (e.g. in holiday centers, holiday homes, training and recreation centers),
guest accommodation and bungalows,
cottages or huts, without service,
rural households (agritourism),
youth and mountain hostels.
Renting rooms by farmers in rural areas, when they rent no more than 5 rooms, does not constitute economic activity.
How to settle rent via the Internet?
Renting via the Internet is a short-term rental, i.e. it is an economic activity, regardless of whether it has been registered or not.
Renting via the Internet is subject to PIT taxation in accordance with the rules applicable to business activity.
It is also subject to VAT. The VAT rate for internet rental is 8% - for accommodation. Internet rental (which is a short-term rental) is in the category 55.20 PKWiU, ie "Tourist accommodation and short-term accommodation facilities".
Renting via the Internet may be exempt from VAT due to the turnover not exceeding PLN 200,000 in the previous year. However, it is not exempt due to the type of activity, which is renting for residential purposes (Article 43 (1) (36) of the VAT Act), as short-term rental is something other than rental for residential purposes.
In the case of an internet rental, the revenues are the amounts due, even if they have not yet been received.
The costs of internet rental include commissions paid to the reservation system and expenses for the maintenance of the rented apartment (utilities, cleaning, laundry, etc.). All expenses should be documented.
Internet rental as an import of services
If the hosts provide their accommodation (for example a tree house) via special websites, such as Airbnb, Booking, etc., these activities, i.e. intermediation of services from outside Poland, should be accounted for as import of services. The service is the intermediation of a website in the field of rental (by offering a website for publication of advertisements, such websites usually charge a commission on the rented property).
Buyers of services are obliged to settle VAT when importing services (in this case, hosts, because they directly purchase the service of assistance in finding tenants, i.e. they use the intermediation of a given website that includes accommodation offers).
Importing services is the use of foreign rental services, not the service of renting a flat abroad. Renting an apartment abroad is taxed in the country where the property is located, which means it is not an import of services.
Import of services requires registration of the taxpayer for VAT-R to VAT-EU. This registration is required for all persons importing services, regardless of whether they are exempt from Polish VAT or not. Non-VAT payers due to import of VAT services show on the VAT-9M declaration and pay it to the office with the possibility of including it as tax deductible costs. VAT payers show the import of services on the side of the tax due on sales and the tax charged on purchases - such a transaction is neutral in terms of taxation.
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Renting via the Internet - other issues
As we already know, the rental offered via the Internet is a short-term rental - and, as a rule, such a rental is a business activity. Therefore, all related buildings (part intended for rent) should be taxed with real estate tax. Real estate that is the subject of activity must be reported to the municipal office.
The amount of the percentage rates of real estate tax is determined by a resolution by the commune council, taking into account the upper limits of the rates announced by the Minister of Finance by way of an announcement.
In the case of the subject of taxation related to business activity, higher amounts of real estate tax are applied.
Registration of other facilities providing hotel services
The requirement of this notification is mandated by the Act on tourist services - it indicates that when providing hotel services in an apartment, such an object should be reported to the "register of other facilities providing hotel services".
Hotel services within the meaning of Art. 3 point 8 of the Tourist Services Act is a short-term, generally available rental of houses, flats, rooms, beds, as well as places to set up tents or car trailers and the provision of related services within the facility.
According to the above, the term "hotel services" also includes the rental of an apartment via the Internet, as it is generally a short-term rental.
The records of objects are kept by the head of the commune or the mayor.
Art. 111 sec. 1 of the VAT Act is constituted by Taxpayers who sell to natural persons who do not conduct business activity and flat-rate farmers are obliged to keep records of turnover and amounts of tax due using cash registers.
This means hosts providing short-term rental services to tourists should, in principle, record their income at the cash register.
It is worth noting, however, whether hosts offering accommodation in their houses are not entitled to an exemption from the cash register on the basis of the conditions listed in the Regulation of the Minister of Development and Finance on exemptions from the obligation to keep records using cash registers.
To sum up - short-term rental via the Internet, as a rule, meets the conditions for running a business. Therefore, the hosts should register the given activity in CEIDG and fulfill other obligations when running the company.
Finally, it is worth emphasizing that each case is individual and in case of any doubts, it is best to apply for an individual interpretation to the tax office.