You are reading page Clarification of freedoms from the NDS during the short-term lease of real estate assets in accordance with the provisions of Article 111 Law 4446/2016 in the context of economic joint use.
The following moments are clarified. The leases of private houses and apartments fall under these provisions, with the exception of buildings so characterized by the abolition of horizontal ownership, buildings of a different type with structural and functional autonomy and premises located in apartments or private houses, if they are connected to digital platforms for less than a year. According to paragraph 3a of Article 111, income derived in the context of the sharing economy from short-term leases of immovable property is exempt from VAT
- Article 22 (par. 1) of the VAT Code includes these provisions. The tenant owns the right, given to him by the landlord, to dispose of the property for a specified period of time and for a fee, and to prohibit any other individual from exercising this right.
- It is noted that the services provided for accommodation in hotels and rented furnished apartments do not fall under the category of VAT exemption and are subject to a preferential VAT rate of 13%. This category includes any other temporary accommodations that are comparable and competitive with the accommodation offered in the hospitality sector.
- Accordingly, short-term leases of real estate in the context of the sharing economy are excluded from the obligation to pay VAT, with the basic premise that, during the lease, the landlord does not provide the tenants with services corresponding to those provided by the hotel or similar to the hotel sector, such as cleaning, bed replacement. linen (rather than providing it, as it is seen as a core offering, not an add-on) and other services for the maintenance and proper care of customers. Equally important, the rental price includes other utilities such as electricity, costs borne by the landlord and then the tenant, and therefore does not qualify for VAT exemption.
- The same category of VAT exemption for equal treatment includes short-term rentals of real estate, which are not carried out through digital platforms, as using or not using the Internet is not a rule for VAT exemptions.
- Exemption from VAT can be provided to individuals and legal entities of this type of lease, with the clarification that exempted persons who lease real estate without paying VAT are exempted from the obligation to register entrepreneurial activity with TIN / VAT, in contrast to legal entities (section 8d article 36 of the VAT Code).
- In cases where the landlord provides additional services during a short-term rental, both within and outside the shared economy, similar to those provided in the hotel or in the relevant sector, the entire price is included in VAT, since the accommodation services are provided with a reduced VAT rate (13%), with the possibility of VAT discount on expenses.