As an individual or through an EOOD:
the tax takes a different path.
The same apartment, a different tax path. A worked example with stated assumptions, with no recommendation on which structure is better.
"10% and 10%" are not the same thing.
For an individual, the 10% tax is charged on 90% of the rent received: the law recognizes a fixed statutory expense of 10%, no matter how much was actually spent (Art. 31 of the Personal Income Tax Act).
For an EOOD (a single member limited liability company), the tax is on the profit, not on revenue: a 10% corporate tax. And when the profit leaves the company as a dividend to the owner, another 5% applies on top of it.
The company counts expenses, the individual counts a fixed norm.
An EOOD can recognize depreciation on the building itself (not the land) of up to 4% a year, plus its actual running and maintenance costs on the property.
An individual has no choice: they use the fixed 10% norm, whether the real costs for the year were lower or higher than that.
Tax on the same rent.
On rent of 490 EUR a month, 5,880 EUR a year, an individual owes tax on 90% of that sum at a 10% rate: 529.20 EUR a year.
An EOOD with no recognized expenses against the full income owes 852.60 EUR a year, at a 10% corporate tax rate plus 5% when the dividend is later distributed.
Individual: 10% on 90% of the rent. EOOD: 10% corporate tax plus 5% on a distributed dividend.
Tax on a sale.
An individual who has owned the property for more than 3 years owes 0 EUR in tax on a sale (Art. 13, para. 1, item 1 of the Personal Income Tax Act); before the three years are up the amount is different and is calculated separately.
An EOOD pays tax on the profit from the sale and then again on the dividend: for a property bought for 100,000 and sold for 130,000 EUR, the combined burden through the EOOD and the dividend is around 6,670 EUR.
Tax relief under Art. 13, para. 1, item 1 of the Personal Income Tax Act for individuals; for an EOOD: 10% corporate tax plus 5% dividend tax.
Buying costs the same, the yearly upkeep does not.
The acquisition tax in Varna is the same for an individual and for an EOOD: 3% of the price, so 3,000 EUR on a 100,000 EUR property.
Registering an EOOD costs a one off 56.24 EUR, but after that come an annual financial statement and a tax return every year, due between March 1 and June 30.
Run the numbers on your own figures, not on an example.
Tell us the rent, the price, and how much of it is the building. We work out the tax for an individual and for an EOOD, with no recommendation.
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