Shall an invoice be issued when leasing out a house in Vietnam? When is leasing out a house exempt from paying PIT and VAT in Vietnam?
Shall an invoice be issued when leasing out a house in Vietnam?
Based on point 2.5 clause 2 Article 6 of Circular 78/2014/TT-BTC (as amended by Article 4 of Circular 96/2015/TT-BTC) which regulates expenses on leasing out property from individuals without complete documents and receipts as follows:
Deductible and non-deductible expenses for determining taxable income
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- Non-deductible expenses for determining taxable income include:
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2.5. Expenses for leasing out property from individuals without complete documents and receipts as follows:
- In case an enterprise rents property from an individual, the documents to determine deductible expenses are the property rental contract and payment receipts.
- In case an enterprise rents property from an individual and the rental contract stipulates that the enterprise pays tax on behalf of the individual, the documents to determine deductible expenses are the rental contract, payment receipts, and receipts of tax paid on behalf of the individual.
- In case an enterprise rents property from an individual and the rental agreement specifies that the rental price does not include taxes (value-added tax, personal income tax) and the enterprise pays taxes on behalf of the individual, the enterprise can include in deductible expenses the total rental amount including the tax paid on behalf of the individual.
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Additionally, according to Official Dispatch 4852/CTHN-TTHT in 2024 from the Hanoi Tax Department regarding issuing invoices for business households, there is clarification:
Based on the above-cited provisions and guidelines, in the case that Seibu Nousan Vietnam Co., Ltd. signs a rental contract with a business household or individual, such business household or individual is not required to use electronic invoices when leasing out out property. The documents to determine deductible expenses for determining taxable income are the rental contract and payment receipts following the guidance at Point 2.5 Clause 2 Article 4 of Circular 96/2015/TT-BTC from the Ministry of Finance.
Therefore, it is suggested that your company base its actions on the actual situation, in alignment with the cited legal provisions, to perform correctly as stipulated.
Thus, this also means that when an enterprise rents property from an individual, the documents to determine deductible expenses include the rental contract, payment receipts, and tax payment receipts on behalf of the individual. The individual is not required to issue electronic invoices when leasing out out property.
Shall an invoice be issued when leasing out a house in Vietnam? (Image from the Internet)
Is leasing out out a house taxable in Vietnam?
Leasing out out a house may be subject to tax depending on the rental income and current regulations. Below are the common types of taxes applicable to rental activities:
(1) Business license tax:
As stipulated in Article 2 of Decree 139/2016/ND-CP, when individuals engage in the business of leasing out properties, they need to consider paying the business license tax. Specifically:
- If annual revenue is below 100 million VND, the business license tax is exempt as stated in Article 3 of Decree 139/2016/ND-CP.
- If annual revenue exceeds 100 million VND, a business license tax must be paid, with tax rates specified in Article 4 of Decree 139/2016/ND-CP.
(2) Value-added tax (VAT):
Pursuant to Article 3 of Law on Value Added Tax 2008 (which is effective until July 1, 2025), rental activities are subject to VAT.
- However, business households or individuals with revenue from production and business activities less than 100 million VND per calendar year will not be liable for VAT based on clause 2 Article 4 of Circular 40/2021/TT-BTC.
- In cases with revenue exceeding 100 million VND, VAT must be declared and paid, with a tax rate of 5% of the taxable VAT revenue, as per Appendix 1 of Circular 40/2021/TT-BTC.
(3) Personal Income Tax (PIT):
According to clause 1 Article 3 of Law on Personal Income Tax 2007 (as amended by clause 1 Article 2 of Law Amending Various Tax Laws 2014), income from leasing out houses is subject to PIT.
- However, if annual revenue from production and business activities is under 100 million VND, individuals will not be liable for PIT per clause 2 Article 4 of Circular 40/2021/TT-BTC.
- Similar to VAT, for individuals with revenue exceeding 100 million VND annually, they must pay PIT, with a tax rate of 5% of taxable PIT revenue, as per Appendix 1 of Circular 40/2021/TT-BTC.
Thus, whether leasing out a house requires tax payment depends on their revenue, including taxes such as business license tax, VAT, and PIT, with specific taxes determined according to current legal provisions.
When is leasing out a house exempt from paying PIT and VAT in Vietnam?
An individual leasing out out property is exempt from paying personal income tax and value-added tax as stipulated at point c clause 1 Article 9 of Circular 40/2021/TT-BTC (as amended by clause 3 Article 1 of Circular 100/2021/TT-BTC) as follows:
Tax calculation methods for certain special cases
- Individuals leasing out property
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b) Individual landlords calculate tax per payment period (the period is determined by the starting time of each payment period) or annually. An individual may declare tax per contract or multiple contracts on one declaration if the property is located within the jurisdiction of the same tax authority.
c) Individuals only engaged in property leasing with a lease term not covering an entire year and annual rental revenue up to 100 million VND will not be subject to VAT or PIT. In cases where the renter pays rent for multiple years in advance, the revenue determining tax liability is the one-time payment allocated annually.
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Thus, individuals do not have to pay personal income tax or value-added tax if:
- The rental activity and lease duration do not cover an entire year;
- Annual rental revenue does not exceed 100 million VND.
Note: Should PIT and VAT need to be paid, the individual must declare taxes for each payment period (determined from the beginning of each payment period) or annually.
Individuals may declare tax for each contract or multiple contracts on a single declaration if the assets rented are located within the jurisdiction of the same tax authority.
