This article provides information on the taxation of rental income derived from car sharing, specifically through platforms like GoMore.

Are GoMore rental earnings taxable?

Yes, income earned from renting your car as an individual through GoMore is considered taxable income. According to the DAC7 directive, GoMore reports the car owner's income directly to the Estonian Tax and Customs Board. You can find more information about this here. If necessary, the car owner can make adjustments directly through the Estonian Tax and Customs Board's e-service. Guidelines for taxing sharing economy services are available on the Tax and Customs Board's website here, including a sample calculation for car rental found later in this article. The Ministry of Economic Affairs and Communications (MEAC) also provides guidelines on peer-to-peer car rental and taxation on their sharing economy website.

Can I deduct expenses related to the rented car from my taxes?

Yes. According to the Estonian Tax and Customs Board, you can generally deduct expenses that are directly incurred from earning rental income by renting out your car.

Example calculation

Liis has rented out her car through a sharing platform. The car was purchased new for €26,000. Liis pays €1,000 annually for mandatory insurance and €350 for maintenance and inspection.

Over the year, Liis rents out her car for 50 days, earning a total of €1,500. The sharing service provider takes a service fee of 25%, which amounts to €375 from Liis's earnings.

Liis can deduct the service fees that the service provider has deducted from her earnings. These €375 are directly marked as costs related to the rental. In addition, she can deduct the proportional part of insurance, maintenance, and inspection costs related to the rental period, which amounts to €184.93 (= 50/365 x €1,350). Since the car was acquired for personal use and not as a means to generate income, Liis cannot deduct the cost of the car.

Important considerations

The Estonian Tax and Customs Board assesses the primary use of the rented activity, meaning whether the car is mainly used for rental (income-generating activity) or personal use (incidental income from sharing services). If the car is primarily used for personal purposes, the associated acquisition costs are usually not deductible. However, if the car is rented out through the platform primarily as an income-generating activity, the car owner's rights to tax reductions are broader, such as compensation for the purchase cost and possible loan expenses deductions. More information is available from the Estonian Tax and Customs Board and detailed guidelines on rental income taxation.

What about renting my company's car through GoMore?

If you are renting a car through GoMore as a main activity, you can create a company profile in our service. You will constantly see accumulated revenues in your profile, which you can then conveniently declare to the tax authority and calculate the corresponding expenses to deduct. We also report your company's revenues directly to the Estonian Tax and Customs Board.

Disclaimer: This article is intended for guidance only and does not constitute legal advice. For specific guidance related to your circumstances, please contact your local tax authority.