Residential Address for a Taiwan Company
In Taiwan, a company must register its company address within the territory of Taiwan. Some investors would choose to register the company address in their own residential or relatives and friends’ address for saving costs. For a residential address to be the company address, the house tax, land value increment tax, land tax, and the individual income tax of building owner would be affected in consequence. Also, the utility expenses are calculated in the basis of business operation rate. Kaizen is going to introduce the types of tax which would be affected for investors’ reference to evaluate registration in a residential address or commercial center which way is much preferential.
- House Tax
According to the article 5th in Hose Tax Act, the house tax rate for a residential address is 1.2%. If the residential address is used as a company address to register, the recognition of residential address would be cancelled as well as the house tax rate increases to 3% to 5% followingly. Here are 2 ways to exempt cush higher rate. The first one is to apply for “partial business”, which means the house is used as residency and business operation simultaneously. The information of square meters of residency and business operation can be submitted to the revenue service office nearby the such address to apply for different rate to impose and a half of areas are registered as business operation, but the minimum square meters are not allowed to be less than 6/1 of the total squares.
The second way is e-commerce and online shopping. The whole property can be recognized as residential one. The transactions are done on the online platforms and the spot is not stored any goods.
- Land Value Increment Tax
If the building owner plans to sell his/her property within one year, the rate of land value increment tax would be affected from 10% to 40%.
- Land Tax
According to the article 16th and 17th in Land Tax Act, the residential house tax rate is two one-thousandths. For business operation, the rate would be adjusted into ten one-thousandths, which is five times than the residential house.
- Individual Income Tax for the Building Owner
The rental income shall be combined into individual income tax to proceed tax return. In the condition that the rented party is the owner, spouse, immediate relatives, sole proprietary, or partnership, the rental income can be exempted from the calculation, but for a rented party being a general company, the income is still be calculated into the owner’s individual income tax.
- Utility Expenses
The water expense is remained, but the electricity expense become business purpose from non-business purpose. The expense for business operation is TWD3.3 per kilowatt. Reversely, for non-business purpose, the expense is TWD2.2 under 200 kilowatts, 201 to 600 kilowatts becomes TWD2.7, and over 600 kilowatts become TWD3.3. The local telephone system becomes TWD295 from TWD70.