Agritourism activities - how to tax them?
Agritourism activities, like other types of economic activity, are, in principle, subject to taxation. However, in certain situations it may be exempt from income tax.
Revenues from agritourism activities constitute revenues from economic activities. Taxpayers running agritourism farms can choose one of four forms of taxation:
general rules and pay tax according to the progressive tax scale,
a flat tax of 19 percent regardless of the amount of income obtained,
flat-rate income tax on recorded revenues - the tax rate varies depending on the type of service provided and amounts to, for example, 17 percent. revenues from the provision of short-term accommodation services, 3 percent. revenues from gastronomic activities (providing holidaymakers with food),
tax card - the tax amount is fixed - determined by the tax authority - and its amount depends on the number of residents living in the town where the agritourism farm is located and the number of people employed.
In the catalog of activities exempt from income tax listed in art. 21 of the PIT Act, there are, inter alia, room rental services. According to Art. 21 sec. 1 point 43 of the PIT Act, the income of agritourism farms obtained from renting guest rooms is exempt from taxation. The exemption is granted when the rent is carried out in residential buildings located in rural areas on a farm. People renting rooms must stay in them in order to rest. The number of rented rooms may not exceed 5. The number of guests using them does not matter.
As can be seen, in order to assess whether the income from this rental will benefit from the tax exemption under the above-mentioned provision, it is not only important whether the buildings are located in a rural area, and the subject of the service is the rental of guest rooms to people staying on vacation. These are only individual conditions for release, but not the only ones. The location of the building in the countryside on the farm and the number of rooms not exceeding 5 is also important.
Other services and exemption
Only income obtained from the rental of guest rooms and from catering to guests is exempt from tax. This means that the exemption cannot be used by other services provided by the entity conducting agritourism activities organized for the benefit of guests. Therefore, the exemption will not be used by, for example, the services of organizing trips to the surrounding areas, horse rides and other recreational services of this type. This is also confirmed by the tax authorities. In his decision of February 15, 2005, No. PB / 415-3 / 05, the Head of the Tax Office in Koło stated that:
"(...) Bearing in mind the above, the price calculation of the so-called The agritourism service should clearly separate the fee for renting guest rooms to people on holiday and for food for people for whom these rooms have been rented (income exempt from income tax), from fees for other recreational services (income subject to income tax).
In the case at hand, there are no obstacles to benefit from the tax exemption of income obtained from the rental of guest rooms and meals, while the income from recreational services is subject to income tax (...) ”.
The provided rental services must concern no more than 5 rooms located in residential buildings. Therefore, if the subject of the lease is whole houses and not rooms, the exemption will not apply. It cannot be used when the number of rented rooms exceeds 5. This is confirmed by the tax authorities. In the individual ruling of April 22, 2010, no. IBPBII / 2 / 415-107 / 10 / HS, the Director of the Tax Chamber in Katowice stated:
“(...) In the application, the applicant did not specify whether rooms were rented on the farm, while the application shows that the total number of rooms rented in both buildings will exceed 5.
In view of the above, it should be considered that at least one of the conditions set out in Art. 21 sec. 1 point 43 of the Act, as the total number of rented rooms will exceed 5. The rental of 5 rooms in the existing building will not be exempt from taxation with personal income tax pursuant to Art. 21 sec. 1 point 43 of the Personal Income Tax Act due to the exceeding of the number of rooms rented jointly in the existing building and in a future-built building (small guesthouse) (...) ”.
Agritourism and other activities
The regulations do not contain restrictions on the performance of other economic activities, however, such services cannot benefit from the exemption.
Doubts in this matter were explained on February 15, 2005 by the Head of the Tax Office in Koło, in the letter no. PB / 415-3 / 05. The questioner was a farmer running an agritourism farm, who also organized catering services for events, parties and trainings on the premises of the agritourism farm and outside it. He asked about the tax consequences of income tax. He received the following response from the tax office:
"(...) The subject exemption applies only to the income obtained from the rental of guest rooms to persons staying for rest and meals for persons for whom these rooms have been rented. On the other hand, the accompanying recreational services (rides, sleigh rides, bonfires), catering services for parties, trainings, organizing First Communion parties, etc., should be qualified as the source of income obtained from non-agricultural economic activity, despite the fact that they are performed using the base and equipment related to the farm, which the goal is agricultural production, the income of which is not exempt from income tax. Bearing in mind the above, the price calculation of the so-called the agritourism service should clearly separate the fee for renting guest rooms to people on holiday and for food for people for whom these rooms have been rented (income subject to income tax exemption) from fees for other recreational services (income subject to income tax) (...) ”.