income tax on the rent

[truman]

Hello there!
I am self employed with OY.
I lease the office from myself (just one room at my three-room flat)
Under the terms of the lease, Oy of mine has to pay a rent once a year.
After that i must pay income tax on the rent i received as an individual.
Can my Oy don't pay this rent so that i as an individual would have no obligation to income tax?
If so, how long my Oy would not pay this rent?
Do i need any alternation to record in the minutes shareholders' meeting or something?

[betelgeuse]

Hello there!
I am self employed with OY.
I lease the office from myself (just one room at my three-room flat)

Do the articles of association permit business use for the apartment? Maybe not an issue since the majority of the apartment is for living purposes.

Under the terms of the lease, Oy of mine has to pay a rent once a year.
After that i must pay income tax on the rent i received as an individual.
Can my Oy don't pay this rent so that i as an individual would have no obligation to income tax?

Yes, Finnish companies don't need to have any lease in effect. There just needs to be an address but this can be the home address of the owner.

If so, how long my Oy would not pay this rent?
Do i need any alternation to record in the minutes shareholders' meeting or something?

Seems like you would be best served by acquiring the services of an accountant.

[Rosamunda]

I have an Oy at my home address and the company doesn't pay me any rent, never has.

From an accounting point of view you need to make a decision rent/no rent and stick to it. You can't change the rules every year (eg just to avoid paying capital income tax or company tax whichever) and yes, you should inform your shareholders (eg in your annual accounts) if it has an impact on your bottom line. Usually shareholders need to be informed of any changes in accounting practice but I don't think you need to ask their permission.

As Betelgeuse suggested, a bookkeeper can tell you whether or not it is worthwhile.

[truman]

I have an Oy at my home address and the company doesn't pay me any rent, never has.
From an accounting point of view you need to make a decision rent/no rent and stick to it.

Firstly, thanks!
Secondly, I hardly try to be an accountant by myself so I thought I would ask here.
Then Ok... i make a decision no rent... but i need to have whichever rent agreement.
I must specify some rent-market-price regardless of the fact that i lease the office from myself, actually.
I can't mark zero as monthly-rent. So what? What should be done from an tax accounting point of view?

[betelgeuse]

From an accounting point of view you need to make a decision rent/no rent and stick to it. You can't change the rules every year (eg just to avoid paying capital income tax or company tax whichever) and yes, you should inform your shareholders (eg in your annual accounts) if it has an impact on your bottom line. Usually shareholders need to be informed of any changes in accounting practice but I don't think you need to ask their permission.

Changes in accounting rules mean changes which cause the same cashflow/situation to result in different financial statements which means accounting practices don't require a static decision for rental arrangements. Theoretically one could be having a rental contract every other year, if, for example, the company only has activities every second year. Whether to have a rental contract is a business, not an accounting decision. All cashflow will be reflected in the financial statements, so that is technically correct although can easily give the wrong impression.

Secondly, I hardly try to be an accountant by myself so I thought I would ask here.

This makes little sense. Should hardly be dropped from the sentence?

Then Ok... i make a decision no rent... but i need to have whichever rent agreement.
I must specify some rent-market-price regardless of the fact that i lease the office from myself, actually.
I can't mark zero as monthly-rent. So what? What should be done from an tax accounting point of view?

I already told you a company needs to have no lease. In such a situation it's relatively accurate to classify the situation as the owner doing remote work for the company from home (and can claim associated deductions).

[Querfeldein]

Secondly, I hardly try to be an accountant by myself so I thought I would ask here.

This makes little sense. Should hardly be dropped from the sentence?

Surely, it meant "I try hard". "I hardly try" would of course be logical (since most adverbs are constructed by
adding ly to the adjective, as in "I strongly try"), but of course, hard is an exception, and hardly means
barely. Finnish may be hard, but English grammar is terrible!

[ajdias]

Hypothetical question here (I don't even have a company): Can you rent a room to your own company from your own house that you are renting already (in this case subletting)? Would you be able to deduct those costs against the cost of the rent, given that you are only charging the business the share of the rental (as discussed in the sharing and subletting thread) or would that be taken as some sort of income transfer? Just thinking of someone wanting to have a home office and would keep a room exclusively for that purpose.

[truman]

Thanks to everyone!

This makes little sense. Should hardly be dropped from the sentence?

Yes, it should.
Really it should sound like this to be clear:
i try with difficulty to be an accountant for my own Oy. For the record, my biz is not accountancy.
This is the sort of IT stuff and consulting. So i need only PC, internet and registered office/business premises which is one from my flat's room, as i said, but never mind.
The thing is that Emigration Service ask me to produce some rent agreement on top of everything else to grant me residence permit.
So they could ask me: - Oy of yours has rent to pay but it doesn't.
What am I supposed to say?
Otherwise I shouldn't try to get information here. Just don't care about it.
p.s. i need residence permit as my job involves staying/living in FI (kind of fieldwork = research that is done throughout the country).
I need to see things. I can't do it remotely.

[tjawatts]

Why does your resident permit depend on your rental agreement between your company and yourself? Surely the rental agreement they want to see is the one between you and your landlord?

You renting to your company doesnt to me make sense from a business or tax point of view to me. If you are a one man company it is just complicating things.

As a general rule the standard "työhuonevähennys" is more worth it than trying to make any calculation as % of costs for the space you use for work. It normally works out as less than the standard deduction.

T

[Rosamunda]

Hypothetical question here (I don't even have a company): Can you rent a room to your own company from your own house that you are renting already (in this case subletting)? Would you be able to deduct those costs against the cost of the rent, given that you are only charging the business the share of the rental (as discussed in the sharing and subletting thread) or would that be taken as some sort of income transfer? Just thinking of someone wanting to have a home office and would keep a room exclusively for that purpose.

Yes, I think you can, as long as your rental agreement allows subletting (most don't). And as long as you are not doing something that requires a special permit like catering or child care etc. But if your business pays you (the main tenant) part of the rent, then technically speaking that is rental income for you (the private you, not the company you). Which is the case of the OP on this thread. So, at the end of the day, when all is said and done, it really isn't worth the hassle. An alternative solution would be for you and your company to become separate tenants with separate rental agreements but I doubt very much that a landlord could be bothered with that.

[Upphew]

Hypothetical question here (I don't even have a company): Can you rent a room to your own company from your own house that you are renting already (in this case subletting)? Would you be able to deduct those costs against the cost of the rent, given that you are only charging the business the share of the rental (as discussed in the sharing and subletting thread) or would that be taken as some sort of income transfer? Just thinking of someone wanting to have a home office and would keep a room exclusively for that purpose.

Yes, I think you can, as long as your rental agreement allows subletting (most don't). And as long as you are not doing something that requires a special permit like catering or child care etc. But if your business pays you (the main tenant) part of the rent, then technically speaking that is rental income for you (the private you, not the company you). Which is the case of the OP on this thread. So, at the end of the day, when all is said and done, it really isn't worth the hassle. An alternative solution would be for you and your company to become separate tenants with separate rental agreements but I doubt very much that a landlord could be bothered with that.

HS disagrees about the not allowing to sublet thing: http://www.hs.fi/kaupunki/a1305952529047

[betelgeuse]

I already told you a company needs to have no lease. In such a situation it's relatively accurate to classify the situation as the owner doing remote work for the company from home (and can claim associated deductions).

Truman, you're making it too hard. By the word "remotely", this is what is meant. Pretend your business exists up in space, and you work for it from home. Businesses do not have to have a physical office. Yours included. It has a mailing address, but no actual physical office. The room you do the work in is your PERSONAL office where you do your day job by working for the Oy.

As a clarification an OY needs to have a visitation address in addition to mailing address. The visitation address does not have to be an office in the traditional meaning. The downside of putting visitation address to a home is, for example, that anyone has the right to ring the door bell and ask to see the list of shareholders.

[ajdias]

Hypothetical question here (I don't even have a company): Can you rent a room to your own company from your own house that you are renting already (in this case subletting)? Would you be able to deduct those costs against the cost of the rent, given that you are only charging the business the share of the rental (as discussed in the sharing and subletting thread) or would that be taken as some sort of income transfer? Just thinking of someone wanting to have a home office and would keep a room exclusively for that purpose.

Yes, I think you can, as long as your rental agreement allows subletting (most don't). And as long as you are not doing something that requires a special permit like catering or child care etc. But if your business pays you (the main tenant) part of the rent, then technically speaking that is rental income for you (the private you, not the company you). Which is the case of the OP on this thread. So, at the end of the day, when all is said and done, it really isn't worth the hassle. An alternative solution would be for you and your company to become separate tenants with separate rental agreements but I doubt very much that a landlord could be bothered with that.

Not sure I was clear: I'm referring to the case where the company pays the share of the rent (let's say 450 out of 1000) to the owner of the company, who is the also tenant of the flat and pays 1000/m to the owner of the flat. It's prob advantageous for both (a flat for 550? a small office for 450?) but there may be obstacles if the tax office sees this may be a way to transfer money tax free (the tenant receives 450 and pays 450 so he's not getting anything, tax should be zero.) But I do see your point.

[Rosamunda]

That's nonsense: The company pays the owner of the company...
If there is one rental agreement in the name of a sole tenant then anything the tenant receives from a third party is declarable income.
I suggest you join the taxpayers association (approx 70e) on behalf of your company have an excellent helpline. The membership would be a deductible expense.

[Upphew]

Not sure I was clear: I'm referring to the case where the company pays the share of the rent (let's say 450 out of 1000) to the owner of the company, who is the also tenant of the flat and pays 1000/m to the owner of the flat. It's prob advantageous for both (a flat for 550? a small office for 450?) but there may be obstacles if the tax office sees this may be a way to transfer money tax free (the tenant receives 450 and pays 450 so he's not getting anything, tax should be zero.) But I do see your point.

Eh? I get paid salary and from that I pay rent, why is that portion of my salary taxed? Shouldn't it be zero as I'm not getting anything?