A government bill passed, to offer tax credits to landlords as an incentive to lower rents to help tenants who find themselves in financial difficulty due to lockdown against COVID-19.
A tax credit equal to 50% of the rent reduction will be available when the landlord reduces the rent for a period of up to three months by 2020. To become eligible for the tax credit, the monthly rent reduction should be between 30% and 50%.
- the tax credit will be granted for a reduction of rents relating to a period not exceeding three (3) months which falls within the tax period 2020 regardless of the agreed months for which the reduction will apply
- a written agreement between the owner and the tenant for the rent reduction should be made
- the credit will not be granted in the case that the owner and the tenant are connected persons as defined in Article 33ˑ
- the tax credit may be used against the total tax resulting for the tax year 2020.
- any refundable tax resulting from this credit, cannot exceed the amount of tax paid.
If a tenant pays €1,000 in rent per month, and the landlord reduces it by half, then, for the three months (e.g. for June, July and August), the tenant will pay €1,500 instead of €3,000 for these three months.
The landlord will be eligible for a tax credit of €750, which is half of the rent reduction.