Renting is a way of earning money that will never let you down. Apartments and houses, offices and commercial premises for doing business - any real estate from dead weight can turn into a source of profit. Even the smallest, most broken and god-forgotten apartment for someone it can be an excellent option for temporary housing. Some kind of income, but still. Whether you receive $4,000 per month or $40 per month for your property, all figures are equal to the tax authorities if they were not declared. The market is full of black realtors and owners with scammer tendencies who deliberately deceive their clients. But even an honest homeowner can become a malicious lawbreaker against his will. Hiding profits and non-payment of taxes on them in Ukraine, as in any civilized country, are punishable by law. If you want to play roulette and try your own luck, that’s up to you. But this is what awaits you if financial fraud comes out of the shadows and falls into the hands of concerned authorities.
What are the dangers of unofficial rental of real estate
No one will immediately put you behind bars, but this is not the only reason that the illegal activities of landlords are fraught with. For your conscious desire to cheat or for unintentionally made mistakes, you will suffer an equally heavy punishment because the tax service is important not the reasons, but the consequences. You may incur both tax and administrative liability, depending on the severity and nature of the offense.
The basic monetary penalty for failure to pay income tax is 18% of the amount of the income itself and 1.5% of the military tax. Also, tax liability for late payment depends on the deadline:
- for being 30 minutes late, a fine of 10% of the profit will be charged;
- for being late for more than 30 days, the fine increases to 20%;
- if your delay is detected not by you, but by the tax service, a fine of 25% is imposed.
Administrative liability is provided for the following reasons:
- Article 163-4 of the Code of Administrative Offenses – a fine in the amount of 34 to 51 hryvnia for late submission of information about the conclusion of an agreement for the lease of real estate;
- Article 164 of the Code of Administrative Offenses – a fine in the amount of 17,000 to 34,000 hryvnia for carrying out business activities without first registering oneself as a sole proprietor.
Article 212 of the Criminal Code of Ukraine provides for criminal liability in the form of a fine for deliberate evasion paying taxes. Such severe measures will be taken if the amount of your income exceeds 4,542,000 hryvnia.
Realtors who tried to keep the signing of the lease agreement secret and did not transmit all the necessary information within the allotted time will also be punished. In accordance with Article 119-1 of the Tax Code of Ukraine, such real estate experts will have to pay 680 hryvnia fine. The amount is not the largest, but illegal activities can leave an imprint on a specialist’s career and cost him his reputation.
How to avoid problems with tax and legislation
Doing everything legally at once is much easier than dealing with the consequences later. Remember that all responsibility for non-payment of taxes lies entirely with you. To avoid fines, take a few simple steps:
- cooperate with a real estate agency and realtor who adhere to the letter of the law in their work;
- Sign an agreement with the tenant to provide your property for rent;
- register your business activity as a sole proprietor;
- regularly provide truthful information about your income to the tax authorities and do not forget to pay taxes on time.
One hidden hryvnia today can result in a thousand hryvnia fine tomorrow.