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Increased Tax

 
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hobbo



Joined: 25 Aug 2012
Posts: 78
Location: Kalkan, Turkey

PostPosted: Tue Nov 28, 2017 10:33 am    Post subject: Increased Tax Reply with quote

Looking for advice.

We rent our Turkish villa out and have been successful in getting good quality bookings (12 weeks already booked for 2018) including several repeat bookers.
The Turkish authorities are reclassifying short-term rentals as commercial income from 1/1/2018 which means getting a business licence and different tax rules (monthly account submissions, no personal allowance etc) this will raise costs but can be covered, However since the KDV (Turkish VAT) threshold in Turkey is zero, 18% KDV should now be collected on all bookings, we should be able to reclaim any KDV paid in Turkey on production of a KDV official invoice, (not easy to obtain in a mainly cash market!). KDV should be invoiced on the date of guest arrival, if the price is not in Turkish Lira then the exchange rate on the invoice date is to be used to convert.
The KDV to be paid on my current bookings for 2018 is >2000

Would you:

a: Take the hit for the 2018 bookings. and increase prices to include KDV in 2019.

b: Pass the 18% on to guests (our T&Cs say 'The Villa rental price does not include transfer costs, airport or other taxes, insurance cover or other costs in whatever form.' )

c: Run for the hills
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ianh100



Joined: 10 Jan 2013
Posts: 471
Location: Sherborne Dorset

PostPosted: Tue Nov 28, 2017 2:36 pm    Post subject: Reply with quote

Hi Hobbo

We were concerned this was going to happen in the UK as lowering of the VAT threshold was being suggested. We don't actually spend a great deal where we could recover VAT spent so it would be a big problem for us.

I assume this is going to impact all of your local competition, do you track the costs of others locally? are they increasing prices? At the end of the day you need to be competitive I doubt everyone will just take the hit.
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hobbo



Joined: 25 Aug 2012
Posts: 78
Location: Kalkan, Turkey

PostPosted: Tue Nov 28, 2017 3:11 pm    Post subject: Reply with quote

ianh100 wrote:
Hi Hobbo

We were concerned this was going to happen in the UK as lowering of the VAT threshold was being suggested. We don't actually spend a great deal where we could recover VAT spent so it would be a big problem for us.

I assume this is going to impact all of your local competition, do you track the costs of others locally? are they increasing prices? At the end of the day you need to be competitive I doubt everyone will just take the hit.


Yes the proposed lowering of the UK threshold got quite a few people 'twitchy'

There is no official ruling on this yet and so most owners that know about it are nervously watching various key sources (the source of the info is the local Tax office and a couple of trusted accountants), quite a few owners have pulled their villas/apartments off the market, most of the rest are planning to increase prices to cover the increased costs but at this moment holding their breath, the difficulty we have is that whilst most only have a couple of weeks booked we are already 50% booked for 2018 and already 4 weeks in 2019
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newtimber



Joined: 24 Nov 2012
Posts: 1516
Location: Brighton

PostPosted: Tue Nov 28, 2017 4:00 pm    Post subject: Reply with quote

I don't know about Turkish VAT, but in UK, it's the VAT rate when the payment is received/invoiced that is relevant not the date the holiday is taken. So if guest pays in advance, they pay the reduced/nil rate.
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hobbo



Joined: 25 Aug 2012
Posts: 78
Location: Kalkan, Turkey

PostPosted: Tue Nov 28, 2017 5:19 pm    Post subject: Reply with quote

newtimber wrote:
I don't know about Turkish VAT, but in UK, it's the VAT rate when the payment is received/invoiced that is relevant not the date the holiday is taken. So if guest pays in advance, they pay the reduced/nil rate.

that would be great and also fair however.. 'Each month the owner (or agent) will have to prepare a Fatura (Turkish invoice) for each rental booking, dated on the day of arrival of the guest(s). KDV of 18% is charged on the rental income. After registration, each owner will need to get a book of pre-numbered Faturas printed for this purpose. As bookings are generally made in GBP sterling, an exchange rate pertaining at the time will need to be used to convert the GBP sterling into Turkish lira.'
I believe the Tax office is aiming to tie up the guest registration system with the rental income.
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