Renting Business Premises: Lease Agreement, Rent Payment and Expense Deduction

What a Commercial Lease Is and How Long It Lasts

A commercial (business) lease is the lease of a property that houses a commercial or professional activity, such as a shop, office, medical practice or restaurant. For leases concluded from March 2014 onwards, the minimum lawful duration is three years, even if a shorter period has been agreed, while older leases carried a minimum duration of 12 years. Termination must be made in writing and, for newer leases, takes effect three months after it is served.

The Electronic Lease Declaration on myAADE: Who Does What

Every property lease must be declared electronically on the myAADE platform. The process has specific stages:

1. The lessor submits the lease information declaration by the end of the month following the start of the lease or any amendment of its terms
2. The tenant and any co-owners are notified and have 30 days to accept or reject the declaration
3. If the lease is terminated, the lessor must declare the termination by the end of the month following it

The existence of a signed agreement does not exempt the lessor from the electronic declaration, nor does the declaration replace the written agreement. If the property is subject to an Energy Performance Certificate requirement, this is recorded in the relevant fields of the declaration. As a tenant, check that the declaration has been submitted and that you have accepted it within the deadline.

Paying Rent: The Rule that Affects Your Tax

For rent to be recognised for tax purposes as an expense, it must be paid by electronic means of payment, that is through a bank account, card or payment service provider. Under a recent provision, from 1 October 2026 electronic payment of rent becomes mandatory and cash payment ceases to be recognised for tax purposes. The rule applies regardless of the amount of the rent, in contrast to purchases of goods and services, where the threshold is €500.

When and How Rent Is Deductible

Rent is deductible as a business expense, provided the general conditions of the law are met:

• It is incurred in the interest of the business and genuinely concerns the housing of its activity
• It corresponds to a real transaction, at a value that does not deviate from market value
• It has been recorded in the accounting books with a lawful document and proof of payment
• It has been paid by electronic means of payment

Rent is recorded in the tax year to which it relates, regardless of the day of payment. Losing the deduction directly burdens the taxable result, as the example below shows.

The 3.6% Stamp Duty: the Cost that Is Forgotten

Stamp duty on commercial leases remains 3.6% and, by established practice, is borne by the tenant, unless the lease provides otherwise. On a rent of €1,200 per month, this amounts to €1,200 × 3.6% = €43.20 per month, or €518.40 per year. It is a cost that must be factored into the business’s budget and discussed before signing.

What to Check in the Lease Before You Sign

1. The duration and the way it ends or is renewed, bearing in mind that the minimum lawful duration is three years.
2. The way the rent is adjusted and how often.
3. Who bears the stamp duty, the common charges and the municipal fees.
4. Whether the rent is subject to VAT, which depends on the lessor’s tax status and the terms of the lease.
5. The method of payment, which must provide for electronic settlement so that the deduction is secured.
6. The conditions for termination, subletting and change of use.
7. The existence and handling of a security deposit.
8. That the lessor will file the lease electronically and will notify you to accept it.

An Example: Why the Method of Payment Matters

Suppose a private company (IKE) rents a shop at €1,200 per month, that is €14,400 per year.

• If the rent is paid through a bank account, the €14,400 expense is deductible and reduces taxable profit
• If the rent is paid in cash, the expense is not recognised for tax purposes and is added back to taxable profit
• Additional tax at a 22% rate: €14,400 × 22% = €3,168 per year

The additional tax of €3,168 corresponds to more than two and a half monthly rents, and would have been avoided with a simple bank transfer. At the same time, the stamp duty borne by the tenant (€518.40 per year in the same example) must be provided for in the budget. The amounts are indicative.

The Most Common Mistakes

1. Paying rent in cash, with the result that the expense is not deductible
2. Failing to check that the lessor has filed the electronic lease and that the tenant has accepted it
3. Omitting stamp duty from the budget
4. Signing a lease without checking the terms on adjustment, termination and liability for common charges
5. Failing to record rent for the months out of operation, for businesses that close seasonally
6. Not informing the accountant about changes to the lease, such as rent amendments or termination

5 Practical Tips

1. Agree from the outset that rent is paid by bank transfer, and keep proof of every payment.
2. Ask your accountant to review the lease before signing, especially for VAT, stamp duty and adjustments.
3. Confirm on myAADE that the lease declaration has been submitted and accept it in good time.
4. Record the lease expiry, renewal and rent adjustment dates in the business calendar.
5. If you are planning to expand to new premises, assess the lease and the form of expansion (branch or new company) at the same time.