The month of April has arrived and with it the period for filing the IRS and IRC declaration. For those who wish to receive a quick refund, we advise you to file your return as early as possible. People who file their tax returns in April, May or June and are entitled to a refund should receive their money by the end of July.

But to be of help, we have spoken to LovelyStay’s accounting team and prepared a step-by-step on how to file your IRS and IRC declaration that will surely help. Check it out below!

It is important to make clear that individuals need to file the IRS declaration. Those who own companies – legal persons – they will submit the IRC declaration. In this text, we present in a simplified way the ways to declare your income.

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As an individual, how should I declare the monthly income that I receive from renting local housing? Should I declare it as income that your company pays me and the amount of which you declare to the Tax Department and inform me of at the appropriate time? Or should I declare it as in the IRS Form 44, as rental income received by me – which I think is not the case?

Income relating to local accommodation is normally reported to the IRS:

  • As the income of category B of IRS, which can be verified by the model of inscription and registration of activity that was delivered to the Finance;
  • Annually, through the IRS model 3 declaration, this year taking place in April, May, or June, regarding the income obtained in the previous year;
  • For example: the income obtained in the year 2020 should be included in the IRS declaration to be sent to the Tax Authority in the months of April, May, or June 2021;
  • The amounts to report on model 3 should correspond to the sum of the invoices issued in the name of each owner to the guests, which is different from the amounts paid to them by our company;
  • In the months in which invoices are issued to guests, there is an obligation to declare those same invoices by the 12th of the following month, through SAFT. However, if the invoices are issued through the tax authority’s website, the SAFT file is not required.
  • For our clients, each owner can check in their shared folder for the invoices issued in their name for guests, when the service is provided by our company.

Note: information applicable to owners (framed as individual taxpayers of the simplified regime)

And how does the declaration work in the case of companies – legal persons?

Income from local accommodation is normally reported to the Tax Authorities:

  • As a provider of services;
  • Annually, through the declaration model 22 of the IRC, this year taking place in the months of April and May, in relation to the income obtained in the previous year;
  • For example: the income obtained in the year 2020 should be included in the IRC model 22 declaration to be sent to the Tax Authority in the months of April or May 2021;
  • The amounts to be reported in model 22 should correspond to the sum of the invoices issued in the name of each owner to the guests, which is different from the amounts paid to him by our company;
  • In the months in which there is the issue of invoices to guests, there is an obligation to declare those same invoices by the 12th of the following month, through SAFT.
  • For our clients, each owner can check in their shared folder for the invoices issued on their behalf to guests, when the service is provided by our company.

Is the municipal tourist tax also considered in the income to be reported for IRS, IRC and VAT purposes?

This is important information for all owners of short-term rentals! The municipal tourist tax is not considered income to be reported for IRS, IRC, or VAT purposes, as it is the amount paid by the guests, which is subject to retention for payment to the Municipality.

However, the municipal tourist tax must be included in the receipt or invoice issued to the guest.

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We have previously written some tips on how to file the IRS declaration. Did you miss it? See more at the link.

So before filing the IRS and IRC declaration, be very attentive to do everything correctly. The process can be a bit laborious, but it is essential to pay attention to every detail.

Translated by Miguel Marinho Soares

Categories: Useful Tips