Renting out office space can be a great way to make extra money, but before you sign a contract with a tenant, it’s important to know who pays the rent tax and how it’s calculated.
In practice, doubts often arise because the obligations depend on whether you rent the office space to a natural or legal person.
When you rent business premises to a natural person
If you are a natural person and you rent space to another natural person, then it is your responsibility to pay rent tax.
The amount of the tax is 10.5% of the total amount of the monthly rent.
Example:
monthly rent = 500 EUR
tax (10.5%) = 52.5 EUR
the amount that remains for you = 447.5 EUR
In other words, you must immediately plan part of the rent as a liability to the Tax Administration. If you do not pay this tax on time, you risk interest and penalties.
When you rent business premises to a legal entity (company)
If you are a natural person and you rent space to a legal entity, the situation is different.
The tax is still calculated at the rate of 10.5%, but the difference is that it is not paid by you, but by the tenant – the company.
Example:
monthly rent = 500 EUR
the company (lessee) pays tax = 52.5 EUR directly to the Tax Administration
pays you = 447.5 EUR
This is defined by law as withholding tax. So, although the tax is included in the price, you as the owner are not obliged to pay it – it is done by the legal entity that is your tenant.
Where does the problem arise in practice?
Although the law clearly defines the rules, practice often looks different.
The owners of the space, aware that the tax is the responsibility of the company-tenant, request that the tax be calculated on the basic rental price.
This means that, if the agreed price is EUR 500, the owner requests that all EUR 500 be paid to him, and that the tenant pay an additional EUR 52.5 in tax.
In that case, renting office space for legal entities becomes more expensive than for individuals.
Why is it important to specify the conditions at the beginning?
In order to avoid disagreements and possible disputes, it is best to precisely define who bears the tax and how it is calculated when concluding the contract.
That way:
the tenant knows exactly how much the lease costs him,
the owner knows what amount remains “clean”,
both parties avoid ambiguities and possible problems with the Tax Administration.
Conclusion
The tax on the lease of business premises is always 10.5%, but the difference is in who pays it:
when issuing to a natural person – you pay the tax,
when renting to a legal entity – tax is paid by the tenant company.
Although the law makes things clear, practice sometimes goes in the other direction, so owners demand that the tax goes “through the rent”.
That’s why it’s important to have an open discussion about tax at the outset and include clear provisions in the lease agreement.
