Families who open their doors to English-language students will be able to deduct a higher amount of cash from their gross revenues before paying tax.
A legal notice has increased host families’ “residence-sharing deduction” from €2,330 to €3,500 – which means families will pay income tax on their revenues after deducting €3,500.
Host families are allowed a “residence-sharing deduction” from their total income, which is granted in respect of the sharing with students of one’s place of residence.
The taxable income is calculated by first taking 65% of the gross payments received from the school, minus the €3,500 deduction. The result is considered to be expenses incurred for utilities. This is then added to the €3,500 allowance and deducted again from the gross revenues, to arrive to a net income that will be taxed at 35%.
The imposition of income tax on the revenue from hosting students back in 2006 had resulted in a decrease of over 30% of host families the year after.
The number of host families had been on the increase, doubling from 937 in 2000 to 2,013 in 2005. But as the government moved to tax the previously undeclared revenues from host families, fewer people started opening their doors to foreign students – declining to 1,359 in the last year.
English-language schools criticised the measure, arguing that host families were not used to having this supplementary income taxed.
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