Rent withholding and second-generation health insurance related issues

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2017-10-01 SANMIN NOTARY AUTHOR: ADMIN

Q1: Under what circumstances do I need to pay “10 %租金扣繳稅款」及「2.11% Second Generation Healthcare Supplementary Premium”?

Answer: Only if the landlord is a natural person and rents to the tenant for business use (opening a company, business name, line name, performing business, etc.), and the monthly rent “reaches” 20,000 yuan”, that is, “2.11% of the supplementary premium of the second-generation health insurance” should be paid, if “the landlord is a natural person and rents it to the tenant for business use (opening a company, business name, bank name, performing business, etc.), the monthly rent “exceeds 20,000 yuan”, and the “10% rent withholding tax” should be paid.

Therefore, if the monthly rent is less than 20,000 yuan; or the landlord is a “company” and not a natural person; Or tenants who rent it for non-business use (e.g. for residential use) do not need to pay the “10 %租金扣繳稅款」及「2.11% Second Generation Health Insurance Supplementary Premium”.

  • Reminder: If the monthly rent is “just 20,000 yuan”, as long as you pay the supplementary premium of 422 yuan (=20,000×2.11%), you do not need to pay the “10% rent withholding tax”.
  • Reminder: From January 1, 110, the supplementary premium rate of the second-generation health insurance will be adjusted to 2.11%.
  • Reminder: If the landlord is a foreigner (non-health insurance policyholder), you do not need to pay the supplementary premium of the second-generation health insurance.

Q2: How to calculate “10 %租金扣繳稅款」及「2.11% Second Generation Healthcare Supplementary Premium”?

Example 1: The monthly rent of 40,000 yuan includes tax:

  1. Withholding tax = 40,000×10% = 4,000 yuan
  2. Supplementary premium = 40,000× 2.11% = 844 yuan

When the tenant pays the rent to the landlord, he must first deduct the rent withholding tax of 4,000 yuan and the supplementary premium of health insurance of 844 yuan from the rent of 40,000 yuan to pay the public treasury, so the actual amount paid by the tenant to the landlord each month is 35,156 yuan (= 40,000 yuan – 4,000 yuan – 844 yuan).

Example 2: The monthly rent of 40,000 yuan does not include tax, that is, the landlord actually gets 40,000 yuan per month:

The IRS considers that “withholding tax” and “health insurance supplementary premiums” also belong to the landlord’s lease income, so the landlord’s monthly rent amount should be calculated backwards using the “reverse calculation”:

*Speed calculation: monthly rent = actual monthly rent amount÷0.8789
If the landlord receives 40,000 yuan per month, the actual monthly rent of the landlord is 45,511 yuan (=40,000 yuan÷ 0.8789), which includes:

  1. Withholding tax = 45,511×10% = 4,551 yuan
  2. Supplementary premium = 45,511× 2.11% = 960 yuan

When the tenant pays the rent every month, he must first deduct the withholding tax of 4,551 yuan and the supplementary premium of 960 yuan from the rent of 45,511 yuan to pay the public treasury, so the actual amount paid to the landlord each month is 40,000 yuan (= 45,511 yuan – 4,551 yuan – 960 yuan).

Q3: Who is responsible for paying the “10 %租金扣繳稅款」及「2.11% Generation Health Insurance Supplementary Premium”? What is the payment deadline? How do I pay? Answer:

  1. The tenant is responsible for paying the “Rent Withholding Tax” and the “Health Insurance Supplementary Premium” (Articles 88 and 89 of the Income Tax Law and Article 2 of the Health Insurance Law).
  2. The payment deadline for “Rent Withholding Tax” is the 10th of the following month, and the payment deadline for “Health Insurance Supplementary Premium” is at the end of the following month.
  3. When paying rent to the landlord every month, tenants are required to withhold the “Rent Withholding Tax” and “Health Insurance Supplementary Premium” from the rent in advance, and print the payment form on the IRS website (click me to go to the “Payment Form for Various Income Withholding Tax” on the Tax Portal of the Ministry of Finance, and print the Withholding Tax Payment Form for teaching) and the Health Insurance Administration website (click me to print or mail the application for the “2-Eleven Supplementary Insurance Premium Payment Form (Voucher Free)” of the Health Insurance Administration, and print the supplementary premium payment form for teaching), and pay it at convenience stores, financial institutions, etc.

Q4: What are the penalties for non-payment of “Rent Withholding Tax” and “Supplementary Premium for Health Insurance”?

A: If you fail to pay the “Rent Withholding Tax” and “Health Insurance Supplementary Premium”, the penalty will be imposed on the “tenant”. Failure to withhold “rent withholding tax” is punishable by a penalty of up to three times the amount withheld by the tenant (Article 114 of the Income Tax Law); Failure to withhold the “Health Insurance Supplementary Premium” is liable to a maximum penalty of three times the amount withheld by the tenant (Article 85 of the Health Insurance Law).

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