KPC.Finance: Short-term leases for Individuals and Legal Entities

Posted on Aug 8, 2019

Α very strong investment interest is observed for real estate and more specifically in the short-term lease market. Most of this is because of the large activity of Airbnb or otherwise the Real Estate Uber, where many property owners now choose to work with platforms similar to AirBnb, such as Booking, Expedia, etc, for the short-term lease of their properties, a fact that has led Greece at accommodating a large number of tourists who choose this form of accommodation.

It is important to emphasize that AirBnb and similar platforms offer an immediate alternative or main source of income. This growth has taken off the economy, resulting to the increase of income for many professions.

Today, in order to have a clear picture of the situation with such platforms as AirBnb but also in order to maximize the full potential of short-term leasing, it is of crucial importance to be informed about the current legislation, along with tax obligations, as well as to be informed about the changes that are on the verge of legislating. Prior to the commencement of short-term lease activities, it is of great important that the owner will check firstly what is more beneficial concerning tax issues and if it would be better to proceed the short-term leasing as an individual or as a legal entity.

For individuals, the taxation is as follows:

  • 15% up to 12,000 euros
  • 33% for income from 12,001 euros to 35,000 euros
  • 45% for even larger amounts, provided that these properties are rented as furnished.

Of course, this scale is valid only if no other service is offered (any extra service other than bed linen) as it is considered as income from a business activity and is subject to VAT, because then the tax rates are changing to the following way:

  • 20% up to 20,000 euros
  • 29% from 20.001 to 30 000 euro
  • 37% from 30.001 to 40 000 euros
  • 45% when the revenue is over 40,000 euros

For legal entities (companies) the taxation is as follows:

Acquisition of short-term leases through a legal entity (company formation), on the contrary, has a fixed tax of 28% on all profits from business activity and the distribution of dividends is taxed at a rate of 10%. The major advantage of legal entities is the flexibility of tax planning of the company through which — just two examples from the many given benefits- the expenses can be deducted and depreciated, which indirectly reduces the tax burden to a great extent — flexibilities that are impossible for individuals.

KPC.Finance specializes in providing tailor-made solutions in a wide framework of financial, accounting and tax management activities. If you are not sure or you want to learn more about what will serve you best and of what will offer you the most privileges in your short-term leasing activities, please book an appointment with us by calling us at 210–6890990 or by sending us an email at contact@kpc.finance.

Find out more about us at www.kpc.finance