Form 115: The Rental Withholding Tax Many Businesses Forget About

If your business pays rent for the premises, warehouse, or office where it operates, chances are there’s a tax obligation that’s easy to overlook: withholding part of that rent and paying it to the tax authorities via Form 115. This isn’t an extra tax on the tenant — it’s an advance payment toward the landlord’s personal income tax (or corporate tax). Forgetting about it is one of the most common slip-ups among self-employed professionals renting their first premises, or small businesses managing several properties without centralized oversight.

What is Form 115 and when does it apply?

Form 115 is the quarterly self-assessment through which the tenant of urban property used for an economic activity declares and pays the tax withheld on rental payments made to the landlord. The obligation falls on whoever pays the rent — the business occupying the premises — not on the property owner, although the withheld amount is deducted from the invoice or receipt and effectively comes out of the landlord’s pocket.

It applies whenever the rented property is used for an economic activity: commercial premises, industrial warehouses, offices, professional practices, or storage facilities. It makes no difference whether the tenant is self-employed, a company, or a professional — if you’re paying rent on business premises, you generally must withhold tax on each payment, remit the withheld amount every quarter (deadlines generally align with the other quarterly forms, within the month following the close of each calendar quarter), and provide the landlord with a withholding certificate upon request.

Renting a primary residence, on the other hand, doesn’t trigger this obligation except in very specific cases (for example, when a company rents housing for its employees’ use), so it’s worth not confusing the two scenarios.

Exceptions and their link to Form 180

Withholding isn’t always required. The regulations set out several cases where the tenant is exempt from this obligation, including: when the annual rent paid to a given landlord for a given property falls below a low threshold (intended for occasional or low-value leases); when the landlord is exempt from property tax (IBI) due to the nature of the property or the owning entity; or when the landlord is taxed under the objective estimation (modules) regime and formally certifies this to the tenant through a signed statement citing the relevant business activity code. In these cases, it’s worth keeping the supporting documentation on file, since in the event of an audit it’s the tenant who must justify why no tax was withheld.

Form 115 doesn’t stand alone: every January, businesses file Form 180, a purely informational annual summary that lists, landlord by landlord, all the tax withheld and paid over during the previous year. The total of the four (or however many) Form 115 filings must match exactly what’s declared on Form 180; any mismatch between the two — a forgotten quarter, a miscalculated amount, or a mid-year change of landlord that wasn’t properly reflected — is often precisely what triggers scrutiny from the tax authorities, since Form 180 is the data they automatically cross-check against the landlord’s own income tax return.

Common mistakes and penalties

The typical mistake is simple: the business dutifully pays the full rent without withholding anything, either because no one flagged the obligation or because they assumed “that’s the landlord’s problem.” The issue is that the responsibility to withhold and remit lies with the payer, regardless of whether the landlord separately declares that income. If the tax authorities discover that no tax was withheld, they can require the tenant to pay the amounts that should have been withheld, plus late-payment interest, on top of any penalty for late payment.

Other frequent errors include filing Form 115 late (which triggers increasing surcharges if corrected voluntarily before being contacted by the tax authorities), miscalculating the withholding by confusing the rent amount with the invoice total when it includes VAT and utility charges, or failing to update the form when the landlord changes mid-year. Checking each quarter that the rent receipt reflects the correct withholding, and that an annual certificate has been issued to the landlord, is the best way to avoid surprises when Form 180 comes due.

At Zythos Business, we help self-employed professionals and small businesses stay on top of exactly this kind of detail — the kind that seems minor but leads to avoidable notices and penalties. We review rental agreements, calculate and file Form 115 every quarter, reconcile the annual Form 180, and make sure every tax obligation is met on time, so our clients can focus on running their business without any surprises from the tax authorities.