The tax incentives provided to landlords for the voluntary reduction of rent charged to tenants - companies whose activities have been suspended due to the COVID-19 pandemic have been extended for the 2021 tax year.
The Tax Law, along with the Special Defence Contribution Law, have been amended and clarify that qualifying landlords can claim a tax credit equal to 50% of the rent reduction voluntarily agreed and implemented between the landlord and the tenant provided that the said reduction does not fall below 30% of the monthly rental amount.
Conditions:
- The relief provided for the rent decrease applies for a period of no more than 3 months and falls within the period from 01/01/2021 until 30 /06/2021, regardless of the months in which the rent reduction is valid;
- No tax credit is permissible for rental reduction that surpasses 50% of the monthly rental amount;
- The landlord and the tenant form a written agreement that regulates the terms of the rental reduction;
- The landlord and the tenant must not be related;
- the tax credit can be used for the total tax allocated for the tax year 2021;
- Any tax refund cannot exceed the amount of tax already paid.
Special Defence Contribution (SDC):
Special Defence Contribution is an additional method where qualifying landlords can claim an exemption. This however applies provided that the rental reduction is not below 30% of the monthly rent and the following conditions:
- The exemption from SDC is applies for no more than 3 months, starting from 01/01/2021 until 30/06/2021, regardless of the approved months of such reduction.
- The landlord and the tenant form a written agreement that regulates the terms of the rental reduction;
- The landlord and the tenant must not be related
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.