About the tax consequences of renting accommodation to an employee of a company

REVERA Georgia lawyers have recently dealt with the issue for one of our clients of what taxes should be paid by a company if it rents accommodation for its employee. Let us share our conclusions with you.

The following taxes must be paid by the company

  1. Withhold as a tax agent income tax for the lessor at the rate of 5% of the amount paid to the lessor.
    A lessor must be registered in the register of lessors and rent the property for non-commercial purposes. Otherwise, the company will be obliged to withhold tax at a rate of 20% rather than 5%.
  2. Withhold as a tax agent income tax for the employee at 20% of the amount paid to the lessor, which will qualify as compensation provided by the company to the employee.


  1. If the lessor is a qualified VAT payer, the company may not act as an income tax agent for income tax on the profits derived from the rental of the property (5% or 20%). In this case, the lessor will have to pay this tax itself.
  2. If the rental of living accommodation is based on the nature of the company's business, the provision of living accommodation to an employee will not qualify as compensation (e.g. renting accommodation to an employee for the purpose of his/her work in segregated areas, etc.) and the company will not be obliged to withhold income tax at the rate of 20% as a tax agent.

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