Wednesday, March 20 2019 13:59

ArmInfo. Most of the residents of Armenia are already familiar with the thesis of the State Revenue Committee (SRC) of the RA - where there are incomes, there should be  taxes. With the development of tourism, very many people in Armenia  started renting their own apartments for short-term and long-term  rent, while earning a decent income.

Is it necessary to share this profit with the state? The correspondent of ArmInfo asked for clarification of the position from the head of the Department of  Methodology, Administration, Procedures and Services of RA SRC  Hrachya Muradyan. As a clarified specialist, the owner, who rents  accommodation under a rental agreement, or provides hotel services  (temporary siting and / or temporary accommodation) for the  fulfillment of tax obligations, must register in the register of  companies as a self-employed entrepreneur or other legal entity. Then  this person will already be considered as doing business with an  independent right to choose the tax regime, including the most  rational one - a turnover tax of 5%.

If the homeowner has signed a contract for employment, then such a  transaction is not considered entrepreneurial, and the individual -  the landlord must pay the state 10% of the income received. It is  necessary to pay tax on personal income once a year by filing a tax  return by April 20 of the year following the expired tax period (they  are considered to be one calendar year). Here we must take into  account that if other services are included in the package, for  example, the provision of breakfast and the like, the taxation  principle changes significantly.

Documentation of the transaction, as Muradyan pointed out, is not  only a red tape, but also a way to protect yourself in the future.  So, if the apartment is rented officially, then the parties  officially document the transaction. That is, the lease agreement is  notarized. In this case, the transaction becomes "visible" for the  tax authorities, and they notify about the need to calculate the  corresponding tax. Then the owner is legally protected: if the tenant  leaves without warning, causing damage to the property, the landlord  can go to the police or to the court to protect the violated rights.  By court decision, the tenant will be obliged to indemnify the damage  caused and the amount unpaid under the lease (employment) agreement.  

The landlord who rents out the apartment informally is not able to  apply for assistance to the courts, since the issue of tax evasion or  illegal business activities inevitably comes up. In addition,  everyone knows about the presence of "well-wishers" neighbors who are  not today, so tomorrow the tax authorities will notify about the fact  of renting housing, and then the court will not only be obliged to  pay all taxes for the past period, but it can also sentence the"  intractable "homeowner to penalty for failure to pay tax.