If I receive rental income abroad do I need to file a tax return?
If you are receiving rental income from a property you own overseas you would have a tax obligation in the foreign country where the property is located. If you are resident in Ireland or the UK you have an obligation to declare this income as 'Worldwide Income' in your annual tax return.
If I file an overseas tax return will I have to pay tax again on the same income at home?
If you are receiving rental income from a property you own overseas and you file a tax return in that country you should not pay tax twice on the same income provided that there is a Double Tax Treaty in operation which covers the taxation of income.
Do I need a tax ID number when buying an overseas property?
In general you will need a Tax ID when purchasing a property as this will be used for all future correspondences with the tax office. Some countries make it compulsory to register for an ID number at the initial purchase stage while others allow applications after the purchase has been finalised.
What taxes would I have to pay on an investment property?
Each country has their own laws governing what taxes are payable, how often they have to be paid and by whom they have to be paid.
The list below is a general overview of some of the taxes home owners might have to pay abroad. They are not a list of all taxes a homeowner will have to pay.
Land registry fees
Taxes applicable when selling the property
Inheritance taxes (IHT)
Where property is purchased through a company Corporate tax would also apply.
What is Double Taxation Agreement?
A Double Taxation Agreement (DTA) is an agreement made by two countries to offset an individual's tax liability in one country against those in another. Each DTA is different and what may be covered in one treaty may not be covered in another.
To view a full List of countries with a Double Taxation Agreement with Ireland click here
To view a full List of countries with a Double Taxation Agreement with the UK click here
What expenses are allowed as a deduction against my tax?
Each country will have its own rules and regulations about what is allowable as a deduction when determining taxable income. In most countries there are certain deductions allowed which will reduce the amount of income to be taxed but there are a number of countries where your rental income is taxed on the gross amount without any allowable deductions i.e. you are taxed on your full rental income.
When would I need to file a tax return?
The tax deadline for filing an income tax return will depend on the country where your income was received and how often you received that income. Some countries require only one tax return while others may require a monthly, bi-monthly or quarterly return to be submitted.
What is a Notary Deed?
A Notary Deed or Title Deed is a form of contract executed by a Notary within the country where the property is purchased. The Notary Deed details who the owners of the property are and sets out the rights and obligations that effect the property. It has become compulsory in most countries for purchasers to be issued with a Notary Deed as they are needed for registering for a Tax Id number and for use when filing a tax return.
I have been asked to enter a reduced figure on the Notary Deed as I have been told that I will pay less tax. Is this true?
Undervaluing the property price in the Notary Deed was and in still is common practice in countries like Bulgaria and Turkey. Buyers are often told that by doing this they will pay less tax initially. While this is true there is a catch which comes after the property has been sold a gain has been made. This is best illustrated in the example below:
Situation A: buyer inputs the actual price in the Notary Deed:
|Initial taxes due @ 4%|
|CGT @ 20%|
|Notary Deed price:||€180,000|
|Tax due (€160,000 @ 4%:)||€ 7,200|
Situation B: buyer inputs a reduced price in the Notary Deed:
|CGT is calculated on profit|
|(€250,000 - €180,000)||€ 70,000|
|CGT @ 20 % of gain:||€ 14,000|
|NB: Total tax paid in situation A:||€21,200|
|Notary Deed price:||€140,000|
|Tax due (€160,000 @ 4%:)||€5,600|
|CGT @ 20% of gain|
|(€250,000 - €140,000)||€110,000|
|NB: Total tax paid in situation B:||€27,600|
From the example above it is clear that while a tax saving will be made at the outset in the long-term the buyer will ultimately loose out when its time to pay tax on their capital gain.
If we sign up for more than one year in advance is there a discount?
Yes, if you think that you will hold the property for a number of years and you will continue to receive rental income in the future PTI will offer a special discount to clients who sign up for more than one years tax filing services.
I own a property in a country where there is no income tax but live in the UK, do I still need to file a return?
Those lucky enough to own a property in a country with a 0 income tax rate are exempt from paying tax on income in that country but unfortunately, if you are tax resident in the UK you will have to declare income received outside of the State as worldwide income in your annual tax return.
Are you able to obtain a tax ID number of my behalf?
PTI can assist you with your Tax ID application.* We complete the paperwork and submit the application on your behalf to the relevant tax office saving you valuable time and money as most countries require that you submit the application in person.
*Certain countries apply
What is the EU Savings Directive?
Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, commonly known as the "Savings Tax Directive", which introduces a new system of information sharing between tax authorities in respect of interest payments, takes effect from 1 July 2005. The purpose of the directive is to ensure that interest payments made in one EU member state to an individual resident for tax purposes in another are taxed in accordance with the laws of the latter. Agreements to introduce similar measures have also been made with certain other states and territories.
The directive obliges financial institutions (or'paying agents') to establish the identity and residence of all individuals to whom they make interest payments. The Revenue Commissioners will receive information regarding interest payments made by Irish paying agents to individuals resident in other EU member states. This information will be forwarded by Revenue to the relevant authorities in the appropriate member state or territory. Similarly, the Revenue Commissioners will receive information from other EU tax authorities in respect of Irish residents who have received interest payments from institutions in other EU countries.
(source Irish Revenue)
My accountant includes the rental income I receive from my overseas property in my resident tax return but I don't file any tax return overseas. Is this ok?
This is a common situation that we are seeing more and more of lately. From your resident countries point of view this is perfectly fine but there are two situations here which should be noted:
Firstly: when you include your foreign rental income with your annual resident tax return there are often a number of deductions which are not deducted as each tax system have their own rules and regulations concerning what are allowed as deductibles. Unless the person preparing your resident return is familiar with the foreign tax system and speaks the language they will not know what costs can be written-off. This is also the most in-efficient tax method for declaring your income as in addition to the above you will also be subject to your rate of income tax which in many cases can be above 40% (UK) or 41% (IRE.)
Secondly: while the above situation will meet your tax obligations in your resident country you are not meeting your tax obligations in the overseas country which leaves you exposed to fines, penalties and interest being imposed by the foreign tax office. If you receive rental income abroad your first obligation is to the tax authorities where the income was received. The main objective with any tax return is to reduce your taxable income by as much as possible. Once the taxable sum is achieved tax is paid based on the income tax rate applicable to non-residents (if different than the resident income tax rate.)If a tax liability is due a payment is made to the tax office. It is at this point that the DTA (if available) would come into force which would ensure that you do not pay tax twice on the same income. Declaring income in the overseas country first is the most Tax Efficient way of ensuring your taxes are in order.
How long does it take to process an overseas tax return?
As each country's tax regime is different each will have their own processing time. In general, typical processing times vary between two months - three and a half months from the time we received all requested documentation.
Where do I send my completed application?
You can post your application to the following address:
Property Tax International,
Overseas Processing Department,
IDA Business & Technology Park,
How to calculate the filing fee
Please go through following steps:
Step 1: Check for suitable annual filing fee
Step 2: Check if additional fees would be applicable (additional owner or additional property)
Step 3: Check if once off fees are also due
Step 4: If you would like to avail of multiple years service please do not forget to apply 20% discount on the repeated annual filing fees.
Step 5: Calculate total fee adding to the annual filing fees if any Once off fees applicable and Administrative fee for all years of filing.
You could also use our help table
||Once off fee
|Once off fee