Income of sole proprietors
- According to the Income Tax Act, income from a commercial or residential lease may be declared either on Form A or Form E. A person shall declare income from a commercial or residential lease on Form E, if the taxpayer is registered as a sole proprietor and income from the commercial or residential lease is his or her business income. If the business expenses are entered on Form E, income must be also declared on Form E.
If the income from a commercial or residential lease is not business income and income tax was withheld on it, Table 5.1 of Form A must be filled in.
If the income from a commercial or residential lease is not business income and the income tax on this income was not withheld, it shall be declared in Table 7.3 of Form A.
- Transfer of self-manufactured agricultural products
If the transfer of self-manufactured agricultural products (sale, exchange) is a line of business of a sole proprietor, he or she has to declare the income received on line 1.1, column 4 of the form E. If a sole proprietor provides other services as well (e.g. clears the local roads from snow with his tractor), it cannot be declared as the transfer of self-manufactured agricultural products, but as the provision of services (line 1.2, column 3 of the form E).
- Transfer of timber
If a sole proprietor has transferred timber (felled trees and stems, parts of stems after cross-cutting the stems) from his or her immovable, he or she has to declare the received income on line 1.1, column 5 of the form E
Upon transfer of timber also the cadastrial register number of that plot of land, wherefrom the timber was transferred must be declared.
- Income from transfer of securities is not taxed as business income but as gains from transfer of securities. Such income must be declared on the form A, either in table 6.1 or in table 8.2.
- Financial benefits and scholarships or grants received in connection with business (incl. the scholarships and grants received from the state budget and the benefits received on the basis of legislation) must be declared as business income. Expenses incurred in connection with business may be deducted from the business income, benefits, scholarships and grants.
- Income from business abroad
When receiving business income abroad the table 1 of the form E must be completed. Registration must be broken down by countries and by types of income.
In the same table also the expenses made for receiving business income from abroad must be entered, and in respective columns of line 3.2 of the basic table of the form E the net amount of income derived abroad should be entered.
Sole proprietors cannot enter the expenses made for receiving the business income abroad under the expenses in the basic table of the form E.