If you let out a furnished property through short term rental agreements or through Airbnb, you have to pay tax on the rent for the apartment and on the rent for the furniture. If you want to rent an apartment through Airbnb, with services that you or an agent provide (e.g. BNBE), the tax regime is slightly more complicated.
How is a furnished rental taxed?
When you receive rent for a furnished apartment, you must distinguish between the rent for the apartment and the rent for the furniture.
1. The rent for the apartment
Whether you use a flat as a second property or receive rent, the tax is calculated on the cadastral revenue multiplied with a coefficient for indexation (1.9804 for 2022) plus 40%. For a cadastral revenue of €1,000, the tax is calculated on €2,672, even if the rent is €1,000 per month.
In Belgium, you do not pay tax on the actual rent. You report the cadastral revenue of the property that is let in box III of the tax return under the codes 1106/2106 for a buy-to-let.
The tax is calculated at the progressive tax rates between 25% and 50%, and when you are working, it will be taxed on top of your remuneration. We can assume this will be 50% (plus municipal taxes), as 50% is due as of about €42,370.
And on top of that you also have to pay the local tax for the commune (the “additionnels communaux”/”gemeentelijke opcentiemen”), usually between 5 and 7%, , so that the tax rate will effectively be 53.4%.
2. The rent for the furnishings
If the apartment is furnished, you must declare the rent for the furniture and furnishings separately. By default, the rent for the furnishings is 40% and the rent for the apartment is 60%.
This means that you pay more tax on the furnishings, but you do not pay less tax on the rent on the apartment; that is still calculated in the same way as above.
It is possible to reduce this 60%/40% ratio and to put another correct ratio, e.g., 70%/30% or 80%/20%, in the rental agreement.
By way of expenses, you can deduct 50% of the rent for the furnishings. Alternatively, you can calculate what expenses you really have in respect of the furnishings and deduct these, but that seems more cumbersome, in particular if the tax authorities start questioning the expenses.
The tax rate is 30%. You pay 30% on 50% of 40% of the rent, that is 6% of the total rent you receive.
And on Airbnb?
If you list your property on Airbnb, the Belgian tax authorities now know exactly how much you make.
If you provide services to your guests, such breakfast and cleaning, you have three types of income. If you do not split them out in the agreement, the taxman will assume 20% is for the services, and the rest is for the rent. That has to be split out 60/40 as above. In that case, you report:
- additional services: 20% as miscellaneous income under codes 1200/2200, see below and expenses under codes 1201/2201.
- rental income: 60% of 80% = 48% ; you just report the cadastral income as before under 1106/2106 in box III.
- rent for movables: 40% of 80% = 32% ; you report 16% under code 1156/2156 in box III.
1. The rent for the apartment
You just report the cadastral revenue for the property under codes 1106/2106 (in Box III of the tax return).
If you rent out a room in your home, you will have what percentage of the house is rented and report that percentage of the cadastral revenue of your home in codes 1106/2106. Otherwise, the cadastral revenue is not liable to tax.
2. The rent for the furnishings
As rent for the movables (furniture, bedlinen, …), you report 40% of 80% of the total rent. Because you can deduct half of that for expenses, you report 16% of the entire rent in code 1156/2156 in Box VII. The tax is 30%.
3. Other services
If you provide services to your guests, such as internet, tv, breakfast, daily cleaning, … and you do not these services separately via Airbnb, you have to estimate the income for these services. The taxman will usually accept 20%.
Whether you charge the services separately or as part of the rent, the payment for additional services constitutes “miscellaneous income” that you report in the second part of the tax return in Box XV under code 1200/2200. That income will be liable to tax at 33% plus the local tax at 5% to 7%, depending on where you live, that is effectively 34.65% to 35.31%.
You can deduct expenses from miscellaneous income. Deductible are all the costs incurred to obtain the income. E.g., the cost of the supply of water, heating and electricity and fire insurance, internet, cleaning services, …. You cannot deduct 50% as above. You report these expenses under code 1201/2201.
When you provide such additional services, VAT is due if the rent is an all-inclusive price, with reception for most of the day, either online or by telephone. In addition, one of the three services must be offered without extra charge: breakfast, change of linen at least every four days or cleaning during the stay – before and after, for stays of up to seven days.
If there are no additional services or if there is surcharge for these services, then, according to the current position of the tax authorities, no VAT has to be charged.
VAT may be due, even if you earn less than the VAT threshold of €25,000 The hotels didn’t like the competition, but you can charge the same 6% VAT like hotels. Moreover, you can deduct the VAT you pay for your rental in your VAT return.
When do you become an Airbnb professional?
However, if you take the Airbnb business a bit further, you may become an Airbnb professional.
The tax authorities take the position that if you have frequent short-term rentals, and you are well organised and structured via Airbnb, you could become a professional landlord and you are liable to social security (at a reduced rate for a secondary activity) and income tax at the progressive rates.
Then you have to pay social security contributions and tax as a freelancer, if you were a self-employed professional or contractor or a company director, you will have to download “part 2” (Dutch/French) of the draft tax return to help you with the tax codes together with the explanation for part 2 (Dutch/French). Roughly speaking, you will keep about half of the income for the additional services.