Short-term rental income in Cuba is taxable and subject to multiple layers of taxation, including fixed fees, sales tax on additional services like food, and progressive income tax rates based on net earnings. Proper documentation and compliance are critical for avoiding penalties.
- **Progressive Income Tax-**All rental income, including that from _casas particulares_, is subject to Cuba’s progressive tax system.- Tax rates range from **25%** to **50%**, depending on the amount of net income earned.- For instance, net income between **CUP 5,000 and 10,000** is taxed at **25%**, rising to higher percentages as income brackets increase.- **Fixed Monthly Fee-**Operators of _casas particulares_ must pay a **fixed monthly tax of about $50 USD** (or its equivalent in CUP), regardless of rental income levels.- This fee is mandatory and applies even during periods of low or no occupancy.- **Food Sales Tax-**If meals or food are provided to guests, there is a **10% tax on gross food sales**.- This applies to any additional services offered beyond basic lodging.- **Documentation and Compliance-**Meticulous recordkeeping is required, including guest logs, expense records, and income declarations.- Accurate documentation ensures correct tax reporting and minimizes the risk of errors or penalties.- **Penalties for Non-Compliance-**Failure to comply with tax obligations, such as underreporting or neglecting to file, can lead to fines and other penalties.- Cuban authorities may impose additional sanctions if they detect ongoing non-compliance or fraud.- **Overall Effective Tax Rate-**Due to the combination of the fixed monthly fee, the 10% food sales tax, and progressive income tax rates, the overall tax burden can vary widely.- Occupancy rates and additional revenue sources influence how much each operator ultimately owes.