When the tenant is a business: the 9% withholding and form WR
When the premises, flat, warehouse or vehicle is rented by a business or a legal person, the law puts all the administrative work on the tenant. The tenant must withhold 9% of the gross rent at source at the moment of payment, declare it on form WR in TAK's electronic EDI system and pay it by the 15th of the following month.
In practice the landlord receives 91% of the contract value and has nothing to declare for that rent — the tax is treated as settled at source. All the owner needs to do is ask for evidence that the withholding was in fact made.
If you are a business renting premises, this withholding belongs in your monthly calendar alongside payroll and VAT — see the tax deadlines.
When the tenant is an individual: self-declaration and the 10% deduction
When a flat or premises is rented by a private individual not carrying on business, that tenant has nothing to withhold. In this case the landlord declares and pays the tax. To compensate for maintenance and property costs, Article 27 of Law No. 05/L-028 allows the landlord a deduction of 10% of the gross rent without having to evidence any invoices.
The taxable base is therefore 90% of the gross rent, to which the 10% rate applies. Declaration and payment are made quarterly, while the annual self-declared rental income is also included in the annual PD return, filed between 1 January and 31 March of the following year.
The end result is the same
Owners often assume one route is cheaper than the other. It is not: 10% of 90% of the rent is exactly 9% of the gross rent — the same as the withholding at source. Only the party doing the filing changes. On a gross monthly rent of EUR 1,000, the tax is EUR 90 in both cases and the landlord receives EUR 910.
The contract deposit is not exempt
The deposit the tenant pays the owner at the start of the relationship is also subject to the 9% withholding. This is one of the most common mistakes: the contract is signed, the deposit is paid in full and the withholding is forgotten, until a TAK audit picks up the difference years later.
Renting out vehicles and equipment
The rule is not limited to premises and flats. Rent for vehicles, machinery and equipment is treated the same way: when the tenant is a business, it withholds 9% and declares it on form WR. On form WR for vehicles, the floor area field is completed with a nominal value (1 m²), because the system does not allow the field to be left empty.
Rent and VAT: 18% on commercial premises, exempt for housing
Withholding tax and VAT are two entirely separate matters. When the landlord is VAT-registered and rents out commercial premises, the rent is invoiced with 18% VAT. By contrast, renting out property for permanent residence is exempt from VAT.
The point where most mistakes are made: the 9% withholding is calculated on the amount excluding VAT, not on the invoice total. On rent of EUR 1,000 plus EUR 180 VAT, the withholding is EUR 90 — not EUR 106.20. The VAT goes separately through the landlord's monthly return.
When the price is agreed as net in hand
Many contracts are negotiated on the amount the owner wants to receive in hand. That figure has to be grossed up before signing, because the tax is calculated on the gross: on net rent of EUR 1,000, the gross is EUR 1,098.90 and the tax payable EUR 98.90. The calculator above does this conversion automatically.
What a rental contract should contain
- Full identification of the parties, including the tenant's fiscal number when the tenant is a business
- A description of the property, its floor area and its use — commercial or residential
- The rent stated clearly as a gross figure, specifying whether it is with or without VAT
- A clause stating that the 9% withholding is made by the tenant when the tenant is a legal person
- The amount of the deposit, the conditions for its return and its tax treatment
- The monthly payment deadline and method — bank payments make it easier to evidence
- The term, termination conditions and responsibility for maintenance and utility costs
If you are unsure how your case is treated, see our tax advisory or the personal income tax questions; our accounting service also covers withholding taxes.
How much is rental income tax in Kosovo?
The effective rate is 9% of the gross rent. When the tenant is a business, it withholds 9% directly at source. When the landlord declares the income personally, a deduction of 10% of the gross rent is allowed and the 10% rate applies to the remaining base — which again comes to 9% of the gross rent.
Who declares the tax — the owner or the tenant?
It depends on the tenant. If the property is rented by a business or a legal person, that tenant withholds, declares and pays the tax, and the owner declares nothing for that rent. If the tenant is a private individual not carrying on business, the landlord declares and pays it personally.
What is form WR and when is it filed?
WR is the form on which a business declares the tax withheld at source from rent, through TAK's electronic EDI system. Declaration and payment are made by the 15th of the month following the month in which the rent was paid.
Is tax also withheld from the contract deposit?
Yes. The deposit is also subject to the 9% withholding, exactly like the monthly rent. It is one of the most frequent oversights in practice, so the treatment of the deposit and the conditions for its return should be set out clearly in the contract.
Does the 9% withholding also apply to rent for cars and equipment?
Yes. Withholding at source is not limited to premises and flats — it also applies to rent for vehicles, machinery and equipment. On form WR for vehicles, the floor area field is completed with a nominal value of 1 m², because the system does not allow the field to be left empty.
Should VAT be added to rent for commercial premises?
If the landlord is VAT-registered and rents out commercial premises, the rent is invoiced with 18% VAT. Renting out property for permanent residence is exempt from VAT. The 9% withholding is always calculated on the amount excluding VAT.
How is the tax calculated when the rent is agreed net in hand?
The net amount has to be grossed up, because the tax is calculated on the gross rent. On net rent of EUR 1,000, the gross is EUR 1,098.90 and the tax payable EUR 98.90. It is therefore safer for the contract to state the figure as gross from the outset.
What is the risk if the rent is never declared?
The liability does not lapse with time: TAK can establish the income from contracts, bank payments or audits at the tenant and assess the undeclared tax together with interest and penalties under the tax legislation. Putting things right voluntarily before an audit is always cheaper than correcting them afterwards.
