How to settle occasional lease in Poland and what should landlords watch out for when it comes to lump-sum tax and VAT? This issue was discussed by dr Piotr Sekulski, tax advisor and founder of Outsourced.pl, in his expert comment for Prawo.pl. In practice, the biggest doubts concern not only the annual PIT-28 tax return, but also whether income from private rental may affect the VAT exemption limit for individuals who also run a business.
How to settle occasional lease? Our commentary for Prawo.pl
Occasional lease is often chosen by landlords who want to better protect their interests when renting out a residential property. However, the type of agreement itself is not enough. Landlords must also remember about the required documents, notification of the agreement to the tax office and correct tax settlement.
Dr Piotr Sekulski, tax advisor and founder of Outsourced.pl, commented on this topic for Prawo.pl. In his statement, he focused mainly on the practical rules for settling lump-sum tax and the risk connected with the VAT exemption limit. Full article you can find here:
How to settle occasional lease for PIT purposes?
For tax purposes, occasional lease is generally settled in the same way as private rental. This means taxation with lump-sum tax on recorded revenue.
The lump-sum tax rates are:
- 8.5% on annual revenue up to PLN 100,000,
- 12.5% on the surplus above PLN 100,000.
In his comment for Prawo.pl, dr Piotr Sekulski explained:
“Lump-sum tax advances are generally paid monthly, by the 20th day of the following month, using the PPE payment code. Quarterly settlement is also possible. In that case, the advance payment is made by the 20th day of the month following the end of the quarter.”
The annual settlement is made in the PIT-28 tax return. It is worth remembering that lump-sum tax is paid on revenue, not income. This means that costs related to the apartment, renovation or equipment are not deducted.
Occasional lease and VAT
In practice, VAT may be a bigger issue than PIT. This is especially important for individuals who run a sole proprietorship in Poland and use the subjective VAT exemption.
For PIT purposes, rental may be treated as private rental. However, the definition of business activity is broader for VAT purposes. As a result, rental revenue may be relevant when calculating the VAT exemption limit.
Dr Piotr Sekulski pointed this out in his comment for Prawo.pl:
“In practice, tax offices are increasingly carrying out verification activities concerning the loss of the right to the subjective VAT exemption, up to the PLN 240,000 limit, where the taxpayer also earns rental income.”
This is important because a taxpayer may assume that if rental is private for PIT purposes, it does not affect their business activity. For VAT purposes, this assumption may be incorrect.e zakładać, że skoro najem jest prywatny w PIT, to nie wpływa na jego działalność gospodarczą. W VAT taka ocena może być błędna.
When can rental affect the VAT limit?
The risk appears mainly when a taxpayer runs a VAT-exempt business and also receives rental income. If the total sales from business activity and rental exceed the exemption limit, the taxpayer may be required to register for VAT.
Therefore, individuals who run a business and rent out an apartment should verify not only how to settle occasional lease for PIT purposes, but also whether the rental affects their VAT status.
Do you want to settle occasional lease? – Find out how can we help!
At Outsourced.pl, we help landlords and entrepreneurs analyse the tax consequences of rental income in Poland.
We can review, among others:
- how to settle occasional lease for PIT purposes,
- whether lump-sum tax on rental is applied correctly,
- whether PIT-28 should be filed,
- whether rental income affects the VAT exemption limit,
- whether combining business activity and private rental creates additional tax risks.
If you run a business in Poland and also rent out an apartment – write to us! It is worth checking whether the rental income affects your tax settlements.
