Question:
I am currently an individual planning to conduct a house rental business. However, I am not clear about the applicable tax regulations that I am required to comply with. Therefore, I kindly request your Company to provide advice on the types of taxes that individuals engaged in house rental activities are required to pay under current laws, as well as the revenue threshold at which tax declaration and payment obligations arise.
Answer
Cases eligible for tax exemption
- Household businesses and individual businesses with revenue from production and business activities of VND 100 million or less per calendar year are not required to pay Value-Added Tax (VAT) or Personal Income Tax (PIT) in accordance with the laws on VAT and PIT.
- Individuals, groups of individuals, and households engaged in production and business activities with annual revenue of VND 100 million or less are exempt from the business license fee.
Legal basis: Clause 2, Article 4 of Circular No. 40/2021/TT-BTC and Clause 1, Article 3 of Decree No. 139/2016/ND-CP
Accordingly, individuals leasing houses with annual revenue of VND 100 million or less are not required to pay VAT, PIT, or the business license fee.
Conversely, if the annual revenue exceeds VND 100 million, individuals leasing houses are obliged to declare and pay VAT, PIT, and the business license fee in accordance with the applicable tax rates and current legal regulations.
I. Regulations on Value-Added Tax (VAT) and Personal Income Tax (PIT):
Pursuant to Clause 1, Article 10 of Circular No. 40/2021/TT-BTC:
“Revenue subject to VAT and revenue subject to PIT for individual business taxpayers is revenue inclusive of tax from the total amount of proceeds from the sale of goods, processing fees, commissions, and service provision arising during the tax period from business activities, including bonuses, sales support payments, promotions, trade discounts, payment discounts, monetary or non-monetary support payments; subsidies, surcharges, additional charges, and additional fees received in accordance with regulations; compensation for breach of contract and other compensation (only included in revenue subject to PIT); and other income received by household businesses and individual businesses, regardless of whether payment has been collected.”
- In the case of house leasing, individuals leasing houses are subject to a VAT rate of 5% and a PIT rate of 5%.
Legal basis: Point n, Clause 2, Article 9 of the Law on Value-Added Tax 2024 and Appendix I promulgated together with Circular No. 40/2021/TT-BTC.
1. Method of tax calculation and determination of payable VAT and PIT:
- Individuals leasing assets shall declare tax on a per-occurrence basis for each payment period (each payment period is determined based on the commencement date of the lease term for each payment period) or declare tax on an annual basis. Individuals may declare tax for each contract separately or declare tax for multiple contracts on a single tax return if the leased assets are under the management of the same tax authority.
- Individuals who only conduct asset leasing activities and whose leasing period does not cover the full year, and whose annual rental revenue is VND 100 million or less, are not required to pay VAT or PIT. In cases where the lessee pays rent in advance for multiple years, the revenue used to determine whether the individual is subject to tax or exempt from tax shall be the lump-sum payment allocated on a calendar-year basis.
Legal basis: Clause 1, Article 9 of Circular No. 40/2021/TT-BTC and Clause 3, Article 1 of Circular No. 100/2021/TT-BTC.
- Payable VAT = Revenue subject to VAT × VAT rate.
- Payable PIT = Revenue subject to PIT × PIT rate.
Legal basis: Clause 3, Article 10 of Circular No. 40/2021/TT-BTC.
2. Tax declaration dossier
- Tax return for asset leasing activities (applicable to individuals directly declaring tax with the tax authority for asset leasing activities and to organizations declaring tax on behalf of individuals), using Form No. 01/TTS promulgated together with Circular No. 40/2021/TT-BTC;
- Appendix detailing the list of asset lease contracts (applicable to individuals directly declaring tax with the tax authority if it is the first tax declaration of the contract or an appendix to the contract), using Form No. 01-1/BK-TTS promulgated together with Circular No. 40/2021/TT-BTC;
- Copy of the asset lease contract and contract appendix (if it is the first tax declaration of the contract or contract appendix);
- Copy of the Power of Attorney in accordance with law (in case the individual leasing the asset authorizes a lawful representative to carry out tax declaration and payment procedures).
Legal basis: Clause 1, Article 14 of Circular No. 40/2021/TT-BTC.
3. Tax declaration procedures and process
- Individuals leasing assets shall submit a complete tax declaration dossier directly to the tax authority with direct management authority, specifically:
- Individuals earning income from asset leasing (excluding real estate in Vietnam) shall submit the tax declaration dossier to the Sub-department of Taxation that directly manages the place where the individual resides..
- Individuals earning income from leasing real estate in Vietnam shall submit the tax declaration dossier to the Sub-department of Taxation that directly manages the location of the leased real estate.
- The deadlines for submitting tax declaration dossiers for individuals directly declaring tax with the tax authority are as follows:
- For individuals declaring tax on a per-occurrence basis for each payment period, the deadline for submitting the tax declaration dossier is no later than the 10th day from the commencement date of the lease term of the relevant payment period.
- For individuals declaring tax on an annual basis, the deadline for submitting the tax declaration dossier is no later than the last day of the first month of the following calendar year.
- - The deadline for tax payment is no later than the last day of the tax declaration dossier submission deadline. In case of supplementary tax declarations, the tax payment deadline shall be the same as the tax declaration deadline of the tax period in which the errors or omissions occurred.
Legal basis: Clauses 2, 3, and 4, Article 14 of Circular No. 40/2021/TT-BTC.
II. Regulations on the business license fee:
1. Business license fee rates:
- Individuals with annual revenue exceeding VND 500 million: VND 1,000,000 per year;
- Individuals with annual revenue exceeding VND 300 million up to VND 500 million: VND 500,000 per year;
- Individuals with annual revenue exceeding VND 100 million up to VND 300 million: VND 300,000 per year.
Legal basis: Clause 2, Article 4 of Decree No. 139/2016/ND-CP
2. Regulations on declaration and payment of the business license fee:
- Business license fee payment deadline: No later than January 30 each year.
- Dossier: Household businesses and individual businesses are not required to submit a business license fee declaration dossier.
- Place of submission: Taxpayers shall submit tax dossiers to the tax authority with direct management authority.
Legal basis: Point a, Clause 9, Article 18 and Point b, Clause 1, Article 10 of Decree No. 126/2020/ND-CP; Clause 1, Article 45 of the Law on Tax Administration 2019
Consultation: Tax services
