Agency flat rate taxation - is it possible?


Natural persons who rent out their private properties often use a professional letting agent. This is a great help for the taxpayers themselves, because in such a case all organizational issues are taken over by the intermediary agency. However, in connection with the use of the services of an agent, there are doubts as to whether lump-sum taxation of rental carried out by the agency is possible?

Private letting on a flat rate

Taxpayers who decide to lease real estate constituting a component of their private property may choose to tax their income with a flat-rate tax.

Pursuant to Art. 2 clause 1a of the flat-rate tax act, natural persons who earn revenues from rental, sublet, lease, sub-lease or other contracts of a similar nature, if these contracts are not concluded as part of non-agricultural business activity, may pay a lump sum on recorded revenues.

However, pursuant to Art. 6 sec. 1a above of the Act, lump-sum taxation on recorded revenues also applies to money and monetary values ​​received or made available to the taxpayer in the calendar year, as well as the value of benefits received in kind and other free benefits under rental, sublease, lease, sub-lease or other contracts of a similar nature.

Although the lump sum is payable only on income, which means that in this respect the taxpayer cannot take into account any tax costs, it may turn out that choosing this form will be an advantageous solution. This is due to the fact that in the case of the lump sum tax rates are lower than when applying the general rules.

A lump sum on recorded revenues, as referred to in Art. 6 sec. 1a of the flat-rate tax act, it amounts to 8.5% of revenues up to the amount of PLN 100,000, while for the surplus above this amount, the lump-sum on recorded revenues is 12.5% ​​of revenues (Article 12 (1) (3) (a) of the Flat-Rate Act tax). Leasing private real estate, not performed as part of business activity, may be taxed with a registered lump sum.

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Flat rate taxation for rental carried out by the agency - is it possible?

As can be seen from the above-mentioned provisions, the flat-rate form of taxation is used only by leases that are not conducted in the conditions of business activity. When speaking of economic activity, one should refer to the definition contained in Art. 5a point 6 of the PIT Act.

The cited provision indicates that economic activity means, inter alia, service activity of a profit-making, continuous and organized nature, and carried out on its own behalf, regardless of its result. It should be emphasized that only a form of economic activity that meets all of the above-mentioned conditions can be considered an economic activity.

In the context of the above legal definition, the question arises whether if a natural person signs a contract with a professional real estate broker, can we consider that we are dealing with an economic activity?

Fortunately, the administrative courts, and behind them also the tax authorities, present a position favorable to taxpayers in this respect, according to which in fact private rental is of a gainful nature and is carried out on a continuous basis, however, it cannot be considered that it has the characteristics of an organized activity. This circumstance is not changed by the fact of concluding a contract with a company dealing in renting and servicing real estate. Consequently, not all the conditions laid down in Art. 5a point 6 of the PIT Act, which means that such lease is not carried out in the field of business activity.

For example, in the interpretation of the Director of the National Tax Information of July 16, 2018, No.IPPB1 / 4511-476 / 16 / 18-3 / S / KS, we can read:

"In the case at hand, there are no grounds to conclude that the rental of a flat by the Applicant and the conclusion of a cooperation agreement with a rental company meets all the conditions for recognition as an economic activity within the meaning of Art. 5a point 6 of the Personal Income Tax Act.

In the light of the above-mentioned legal regulations and the presented description of the future event, it should be stated that if, in fact, the lease conducted by the Applicant does not meet the conditions allowing it to be considered a non-agricultural business activity, the income on this account may be included in the source of income specified in Art. 10 sec. 1 point 6 of the Personal Income Tax Act. In connection with the above, the Applicant will be able to exercise the right to settle the income obtained from the rental of the apartment in the form of a lump sum from the recorded income ”.

As a consequence, currently taxpayers do not have to worry about the exclusion of the right to a lump sum when using the services of a professional real estate agent. Such a rental does not meet the conditions for recognizing that we are dealing with non-agricultural economic activity. Renting a private property through a company dealing in this area allows you to use a registered lump sum.

Moving on to the summary of the article, it should be pointed out that, in accordance with the well-established position of the tax authorities, rental conducted by an intermediary agency does not turn this type of rental into an economic activity. The criterion of organizing the activity is not met. As a result, lump sum taxation on leases held by the agency is allowed.

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