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“The non-payment of taxes on income from the rental of residential premises is identified by the control authorities as one of the most latent violations. As a result, a situation has arisen in which some owners do not declare income from property rental, thus avoiding tax obligations Despite the constant attention that the tax authorities pay to this issue, it should be noted that the usual means of tax administration alone do not produce the final result.
To eliminate this negative phenomenon, it is necessary to create an additional legal and technical mechanism that ensures adequate compliance with tax legislation, including the implementation of the principle of equality of taxpayers, by determining the availability of information necessary for the tax administration ” , describes the Ministry of Finance. .
It is proposed to introduce the obligation for persons (landlords) who have entered into residential lease contracts, modified the essential terms of these contracts, as well as terminated these contracts to register these facts in the Land Registry in accordance with the established procedure. The registration of residential lease contracts would be valid for both natural and legal persons.
“Currently, residential lease contracts are registered in the Property Registry on a voluntary basis, with the aim of ensuring the possibility of using the fact of entering into a residential lease with third parties, if necessary. The registration itself takes up to 5 business days.
Thus, the legal acts of the Republic of Lithuania do not provide for the obligation to compulsorily register all the residential lease contracts concluded, nor the legal (administrative) responsibility for non-compliance or improper fulfillment of said obligation ”, states the explanatory note.
The lack of registration of the contract provides the corresponding sanctions. As written, the slightest penalty is a warning.
“For example, an administrative sanction – a warning could be imposed in cases where a person has paid taxes on income from the rental of a house but has not registered it in accordance with the procedure established in the lease,” it read in the draft.
However, fines can also be imposed. The fine for owners of natural premises – natural persons – is 200 to 400 euros, the fine for owners – administrators of legal persons or other responsible persons can be 400 to 800 euros. Repeated violations would increase the fines. Residents would have to pay between € 400 and € 800 and business leaders between € 800 and € 1,600.
Exceptions are also provided. The requirement to register contracts would not apply to budgetary institutions, the Bank of Lithuania, state and municipalities, state and municipal institutions, services or organizations, the state company Deposit and Investment Insurance, and European economic interest groups.
It is proposed that the modifications to the law come into effect on May 1, 2021. The Seimas should approve these modifications.
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