No more written declaration when choosing lump-sum tax
As of January 1, 2019, new regulations on lump-sum taxation of revenue from private tenancy will enter into force. The Ministry of Finance is planning a positive change for taxpayers, which consists in the exemption from submitting a written declaration on the choice of a lump-sum tax to the head of the tax office. The taxpayer will declare their intent to pay the lump-sum tax by way of paying the first tax payment determined on the basis of the lump-sum rate. If the taxpayer generates first revenue from private rental in December of a particular tax year, a submission of PIT-28 tax return will be equal to choosing the lump-sum income tax.
Pursuant to the current regulations, the taxpayer shall submit a relevant written declaration by January 20 of a given year. If the taxpayer started generating revenue during a tax year, the declaration shall be submitted not later than by the 20th day of the month following the month when the taxpayer generated the first revenue, or until the end of the tax year, if the first revenue was generated in December of the tax year.
Bank transfer instead of revenue registry
The planned amendment provides for abolishing the obligation to keep a private tenancy revenue registry, unless the level of revenue is stipulated in a written tenancy agreement. The amount of revenue will be determined on the basis of a proof of receiving revenue, e.g. by means of a confirmation of the bank transfer to the landlord’s account.
The difference between private renting and business activity
As a side note it is worth mentioning the recent ruling of the Provincial Administrative Court in Opole regarding taxation of private renting (ref. I SA/Op 191/18). In its ruling, the Court declared that an individual person investing considerable funds in real estate in order to achieve earnings is an entrepreneur. The ruling was the outcome of a dispute whether an individual person receiving income from renting more than 20 apartments shall be treated as an entrepreneur obliged to settle tax according to tax or flat rate. The tax authority claimed that while the number of rented properties does not necessarily determine whether an activity can be classified as business, it is impossible to obtain earnings from more than 20 premises without taking care of them in an organized and continuous fashion. Therefore, according to the tax authority, a person renting a considerable number of premises should be considered an entrepreneur, who cannot apply the lump-sum tax. The Provincial Administrative Court in Opole agreed with the tax authority in this matter.
