Tax for tenants?

Looks to me like an abuse!

"Maltese government applies a tax of 15% on rental income, that is valid for residential contracts only. The tax, introduced in January 2014, is paid by the LESSOR. "

http://www.lawyersmalta.eu/rental-contract-in-malta

Is the 70 Euro equivalent to 15% of the rent?

Yes it is but why is it for us to pay? Irs her who gets revenue.
Why do I pay her tax?

Do you have a rental contract?
If so what does it say regarding the cost of the rent  and do you get official receipts for the rent  ?
Is this €70 on top of your normal rent if so its a rent increase and should be recorded as such.

Terry

We do have a tenancy agreement.She said this the 70 euro is the 15 % of our rent because rent here is taxable.we oaid this tax from day one.

amej wrote:

Yes it is but why is it for us to pay? Irs her who gets revenue.
Why do I pay her tax?

You pay VAT when you buy something at the store don't you? The store has to collect that tax from you and pass it to the government.  It's the same as your landlord, that has to collect/pay tax on your rent.

If you agreed to it in your rental contract, I don't see why you are complaining.  If I rent out my place and I want 400 EUR/month from it, I have to add the tax onto the rent (460 total) that so I get that full 400 EUR income, instead of 340 EUR.

It depends...
Did u sign for (for example) 400 or for 330??
this 15% must be paid by lessors, but u know people are smart and think "ok i will increase the rent of 15% and the tax will be paid by them". Perfect. I'm italian and this sound too familiar to me
But depends: if you had signed for 400 now you can't complain BUT if you had signed for 330 the landlord can't wake up now and say "hey i want 70 euros more because i have to pay taxes!"

Our landlord tried to do something similar but didn't call it tax, he said if we want to pay via bank transfer or get a receipt we have to pay VAT of 7%. Basically he was trying to get us to pay in cash because he said if we do that - unrecorded - no VAT needs to be paid.

I googled it and found articles about discrimination of non-Maltese that have been residing in Malta less than a year. Apparently VAT is due in those instances because under a year you're still a tourist. But then your rental has to be licensed by the Malta Tourism Authority.

Is this still applicable since I didn't find any recent articles? I wonder if some landlords are still trying to make big bucks this way (without bothering to license their rental property of course )

There is a lot of confusion with this one. 

You are absolutely right:  your landlord is in receipt of the rental income and therefore he / she is liable for that tax.

VAT ( Value Added Tax) is not payable for a roof over your head.  In Maltese law, however, a tourist is defined as somebody who lives in his non usual place of residence for up to a year, and because they are classed as a tourist, are charged VAT. 

Therefore, there is a clash between the definition of a tourist in the Malta Travel and Tourism Services Act, and EU freedom of movement enjoyed by all EU citizens, who, according to EU law, are regarded as resident in an EU country from DAY ONE of their stay.  The Maltese Travel and Tourism Services Act is in breach of EU law.  If you are being charged VAT, the EU should know about it.

What it comes down to is the rent your rental contract stipulates that you have to pay per month.  You are legally obliged to pay the amount on the contract.  You are NOT legally obliged to pay an amount larger than this.

Johanna MacRae wrote:

There is a lot of confusion with this one. 

You are absolutely right:  your landlord is in receipt of the rental income and therefore he / she is liable for that tax.

VAT ( Value Added Tax) is not payable for a roof over your head.  In Maltese law, however, a tourist is defined as somebody who lives in his non usual place of residence for up to a year, and because they are classed as a tourist, are charged VAT. 

Therefore, there is a clash between the definition of a tourist in the Malta Travel and Tourism Services Act, and EU freedom of movement enjoyed by all EU citizens, who, according to EU law, are regarded as resident in an EU country from DAY ONE of their stay.  The Maltese Travel and Tourism Services Act is in breach of EU law.  If you are being charged VAT, the EU should know about it.

What it comes down to is the rent your rental contract stipulates that you have to pay per month.  You are legally obliged to pay the amount on the contract.  You are NOT legally obliged to pay an amount larger than this.

Thanks Johanna for clearing this up. The rental contract states our normal rent plus "VAT of 7% is to be paid by the lessee if applicable." So you could argue over that last sentence. We're not paying any because we pay in cash. I know it's risky but we've searched so long and have come across some real shady landlords - ours has been super nice so far.

I can't believe Malta is treating us as tourists - we're paying taxes and social security - tourists don't do that!

VAT is definitely not applicable in your case.  You are not tourists if you are living and working here, especially if you are an EU citizen.

It's not at all risky for you.  It is risky for your landlord.  He should be paying an income tax on his rental income.  Same as the rest of us on PAYE or honest, self employed people! 

If it is shown that your landlord is not declaring his rental income on his income tax return, he could be fined or even imprisoned, as far as I know.

However, If the landlord has not paid tax the tenant is also responsible if its found that he has paid cash to the landlord without receiving an official receipt.

So tread carefully and take legal advise before you confront or accuse your landlord!

Terry

No, this is not correct.  If a person lies on their income tax return, then it's the person who is in trouble.  Nobody else.

With regard to VAT, any VAT on an essential, like a roof over your head, is against EU law.

An official receipt is required in law for any business transaction in Malta.
Ignorance of the law is not an excuse for either the issuer or the recipient.

Terry

I don't recall paying a tax on top of rentwhen I lived in Malta. I was asked to pay for the maintenance of the lift when the flat was on the main floor. I passed on it.

Most likely is it a VAT charge, since accommodation is taxed at 7% which the tenants has to pay.  if you paid €70 VAT then the charge should have been €1000 + 7% VAT = €1070.  You should make sure that you get a VAT receipt especially if you are paying in cash, otherwise the tenants might be pocking the tax.

It is more likely to be a ' surcharge' to counteract the 15 % tax rate for rental income ( if and only if declared) that private lessors pay ( if they declare -))

VAT only applies to commercial business and not private people.

I myself get a VAT receipt for my rental payment as it goes to a company renting out the appartment but there was never any talk about me paying a surcharge because of this. It is part of the rental payment.

Cheers
Ricky

i was led to believe  when we arrived that owners reflected the VAT charge of 15% into the cost of thr property rental so it was all inclusive and the only VAT reciept we ever recieved was one form the agent for their fees.

I have had a tecent incident with our LL.  She charged us 750 rent per month since we arrived. We work live and pay tax and has a residential ID card and social security number so I. presuming that is no longer classed as a tourist?

10 months into our stay we noticed that the LL was recieving a subsidy for their pension in their utiliy bill. We have always paid the bills as we have gone along but when this subsidy started showing on the bill I became suspicious and started chalelnging the reason why we were being asked to pay her the difference in cash even though it was deducting on average 20-25 euro a month off the bill.

I have kept copies of all the bills but have only ever recieved the top copy and have never been shown where the meters are but they consistently tallied with the readings so had no issue. Ive since learned that we wre on 0 residents so are paying above the standard rates and on top of that cash for the subsidy. I challenged it and the last time it came ot paying the bill She was very reluctant in me copying the bill and pleaded not to show it to anyone. This made me even more suspicious so I asked a neighbour to show me where my meters were.  It turns out that my meter for the flat is the only one thats no isolated away form the mother baord like the others in the block so this made me more suspicious. Anyway the LL came to me after I paid the bill and said she was going to in rease the rent by about 150 euro because she was losing out and she wpuld have to pay the 15% tax to the goverment, she then started saying she reduced the rent at the beginning because she liked us as tenants and wanted us to have. good start here. Fair enough but to increase the rent to 900 a mth to cover the cost of the tax she would have to pay to the governent, my and my husband said it was above our budget and she should have advised us in the first place not nearly a year down the line when it suited her to go 'legal' . We dont wnat any part of it and have advised the son we are not accepting the increased rent or the change in tenancy ownership as its being passed to him.
I spoke with the agent who was very good today and they advised me were entitled to two months notice for rent increase and two months notice to change the tenancy. Ive never had a reciept for the rent per month either.

It seems LLs monopolize what they do here in their own rights and foreigners who support their economy are discriminated and penalised for it.There are some things that I simply will not accept, LLs  have a certain amount of personal responsibility for their own actions. Its amazing how many places we view and the LLs start adding extra things on when you get there.

Do your due diligence and call the tax dept. Your LL  sounds like a real gem; give them his her name and  aak if your lpayment are being reported accordingto the law.

ricky wrote:

It is more likely to be a ' surcharge' to counteract the 15 % tax rate for rental income ( if and only if declared) that private lessors pay ( if they declare -))

VAT only applies to commercial business and not private people.

I myself get a VAT receipt for my rental payment as it goes to a company renting out the appartment but there was never any talk about me paying a surcharge because of this. It is part of the rental payment.

Cheers
Ricky

Not strictly true if the property is classed as a holiday rental...

Leasing Malta property.

Leasing property in Malta is generally considered to be an exempt without credit supply, meaning that no VAT is chargeable on the lease of such property. Having said this, the lessor will not be able to claim any VAT on expenses incurred in maintaining such property.

Exceptions to this general rule do exist, meaning that certain property leasing can be considered to be a supply with credit. In such case, the taxable person will be obliged to charge VAT according to the applicable rate, and will be able to claim VAT on the expenses incurred and which are directly related to the leasing of the property. These exceptions are:

-       Letting for the purposes of accommodation in any hotel or guest house or similar establishment or in any holiday camp or camping site. The chargeable VAT rate is 7%.

-      Letting of accommodation in holiday flats required to be licensed in virtue of the Malta Travel and Tourism Act. The chargeable VAT rate is 7%.

-       The letting of immovable property by a tax-registered person to another tax-registered person for the economic activity of that registered person. VAT chargeable on such transaction will be 18%.

Terry

Wow roadtripper, that's just shocking! I "can't wait" to receive our first bill from our landlord - that is if we ever get to see it. I'm sure there'll be a few nasty surprises, too.

I'm wondering how one can protect oneself from those landlords? We've asked all the right questions but what can you possibly do if at contract stage, when you've already paid the deposit to secure your property, the landlord whips out his/her own "template" with - SURPRISE! - a VAT of 7% on top of the rent and we have to service all air conditioning units every 3 months?? Anyone had that one before?

Btw, this also happened to the first property where we got out last minute because the landlord also came with his own contract template. Luckily in this case we had not paid anything yet. What can you do in this instance?

Have a look at this site to learn what a minefield renting in Malta can be...

http://maltatenantsupport.weebly.com/blog

They may be able to offer advice also.

Terry

Threads like this get me panicked.  I think we've got a good landlord, but it's obviously his first property and his first time renting so I get the feeling he's learning along the way.  He never comes round, we pay by bank transfer so that to us is our receipt.  Should we be asking for something else from him?

We've seen electric bills and it's down as 4 living here, so I'm assuming he's not trying to dodge any taxes or anything. On our contract it states the rent due and then 'this rate does not include VAT. Any present tax on the rent due or any further taxes that may be imposed such as rates or land tax or any similar tax on building should be paid according to law'. 

I'm assuming there's nothing else for us to be hit with here?

The fact that you are paying your rent by bank transfer is very positive and the number of residents is a sign that you are on the right electricity tarif.

What I don't like are the other wordings referring to taxes ! They leave a lot open to discussion which can be a problem.

Cheers
Ricky

Thanks, Ricky.

That part does make me feel uncomfortable to be honest, I'm not sure why I didn't question it before because he was quite willing to go through the contract, changing anything we didn't like. I think I might get that changed when it comes up for renewal though, just to be sure.

Why I have to paid for the landlord a tax payment for he is own property, Already we paid  deposits of the house, Agencies Fees and is very very high already everything
Only Stupid people let the Landord to rape you money off .

THIS IS Illegal ??????

This is the Many  Maltese Landlord way
But you have to ask by writing you bills in what
You have been spend;  with the Landord Name and Address on the Top, And make sure it is start from the same day you move, until the present.
The have to give to you? ?The difference than another wise take things to the practice? ???

I doubt he will come back with the same offer. If he sees any of these posts he will rise your rent and get a new tenant who will be ripped off for more just for the honour of renting his flat. Start looking elsewhere ahead if your end of lease.

Everyone knows about that is Not new to anyone
The problem is people coming on hol for short time ,And are desperation for where to Stay
Hello this is Not my case.
If the Landord is Not a truly and serious person
With the rent, ,This is he is problem.
My is to stand with my right and by law.
What in the case between Landlords and Tenants
Many of them Rap people Money off? ?
In which paradise did you live. ?
And you don't know that?
Where pretending sometimes Not meaning to be
Inocenent? ????
Thanks.

Sam , the general rule when your tenancy comes up for renewal is that you dont recieve a new tenancy it normally rolls on however if you want to raise something thats an issue for you then dicuss it with the LL and come to a new terms of your agreement.