How much tax do you have to pay? - Letting of plots of land

Any profit is taxed in principle as capital income at the rate of 22 percent. Correspondingly, any deficit will become a deduction.

However, it isn't necessarily always the case that rental income is taxed as capital income. In some cases, rental income can be taxed as business income, at a tax rate of up to 50.6 percent.

Whether the letting is considered a business activity depends on a specific overall assessment that examines the scope, frequency and duration of the activity, among other things. The Tax Administration has made a series of binding advance rulings for when letting of a plot of land should be considered a separate activity, and has stated, in particular, that long-term lease of a plot of land will only exceptionally be considered a separate activity. (See BFU 03/2006).