Which Tax Scheme for the foreigners
Since last year the government proceed to change the taxation system for foreigners. This will affect directly anybody with a real estate investment in Guatemala that is used for vacation rentals.
Previously foreigners staying less than 150 days had no obligation in reporting incomes made in Guatemala. But since 02-2012 any foreigners living permanently or not having having for example a vacation rental has to report this and filled for Income Tax.
You can choose from different options.
First of all you have to distinguish between reporting the VAT tax (12%) that is included in any services, good sold.
Option 1 : your income won't be superior to Q 150,000 a year (roughly under $ 20,000 at the current rate of Q 7.75) then you can filled as small contributor (pequeno contribuyente) and you will be paying only 5% on your growth.
Option 2 : Or you can just be a normal contributor and then you will balance the VAT you paid through your buying against the one collected on your sales, and pay monthly the difference.
Now in the case of Impuesto Sobre la Renta (Income Tax) you have two options either you choose the category general or category optativo
In case of the general income tax 5% per month, when you sale under $ 2,000 a month above this amount you will be paying 6% per month during year 2013. Then it will raise to 7%.
But if you choose the optional regime which is quarterly for the year 2013 will be 8% and 31% per quarter.
It falls to the taxpayer to choose the category he wants to file in. You can always change category.
If you are a small contributor for the VAT you will need only the inventory book and cash book.
If you are paying the 12% VAT monthly you will need the books of sales, buying, dairy, general, balance for financial and inventory.
You can claime the VAT paid on any purchaes if the expenses are related to the company business.
It is very important to consult with us prior to buy a real estate property in Guatemala for example in Antigua, Lake Atitlan, Rio Dulce because you need to know how to structure it to optimize the taxes you will have to pay. Still if your vacation rental is going to produce less than $ 20,000 a year your rate will be only 5% still a good deal to invest in Guatemala either for investment or to plane to your partial retirement.