Real Estate Renters Required to Pay Taxes: State Revenue Committee Defines Threshold

The State Revenue Committee has issued a notice regarding the rental of real estate, stating:

“What should be done as the first step when renting out real estate? It is necessary to sign a rental agreement, which must be legally registered. If it has not been registered, the individual renting out the property must visit any tax payer service unit and submit a paper declaration regarding the rental.”

The form of the declaration is available here.

When should the declaration be submitted? An individual who is not an individual entrepreneur and is renting out real estate must submit the declaration to the tax authority within 5 days following the date of the rental provision. In the case of ceasing to receive income, the declaration must be submitted within 5 days following the date of cessation.

How to complete the declaration? The declaration must be submitted to any tax payer service unit in paper form, filling in the following information: name, surname, patronymic of the renting individual, taxpayer identification number (TIN) which must be obtained beforehand, passport details, public service identification number or the number of the notification confirming lack of such, date of declaration submission, data regarding real estate, rental terms, and the amount of income derived from the rent.

How to obtain a taxpayer identification number (TIN)? To submit the declaration and pay the income tax, it is necessary to obtain a taxpayer identification number from the tax authority and sign a contract for submitting reports electronically by visiting any tax payer service unit or authorizing another person to act on their behalf at the tax authority. This can also be done online through the Reporting Submission Electronic System at file-online.taxservice.am.

What is the rate of income tax? When renting out real estate to individuals, the renting individual is obliged to pay income tax based on the rental income at a rate of 10%. If the total amount of rental payments received during the tax year exceeds 60 million drams, an additional income tax at a rate of 10% is calculated on the excess amount.

When and how should income tax be paid? The income tax from rental payments must be calculated independently and exclusively through the electronic system at file-online.taxservice.am, submitting an annual report on income tax and social payments to the tax authority. The income tax should be calculated and paid by May 1 of the year following the reporting year.

What is the amount of the fine? According to the law on amendments to the Tax Code of the Republic of Armenia, adopted on October 25, 2023, starting December 1, 2023, a fine will be imposed for not complying with the requirements set forth in the Code regarding real estate rental, amounting to 5% of the market value determined by law, but not exceeding 500,000 drams. If the violation is repeated within the same year, the fine will be collected at a rate of 10%, not exceeding one million drams.

In which cases will the fine not be applied? If the rights arising from the rental transaction of real estate have been registered, the fine will not apply. Additionally, if the rights arising from the rental transaction have not been registered, but a declaration regarding the income received from the real estate rental has been submitted to the tax authority within the required timeframe, or if the taxpayer has calculated income tax from the income received from the real estate rental in accordance with the law, no fine will be imposed.