FAQ's

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 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.

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.

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.

Initial taxes:
Transfer Taxes
Stamp Duty
Local Taxes
VAT
Land registry fees
Communal taxes

Ongoing Taxes:
Income taxes
Local taxes
Environmental taxes
Wealth taxes

Taxes applicable when selling the property
CGT
Inheritance taxes (IHT)

Where property is purchased through a company Corporate tax would also apply.

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.

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.

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.

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.

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:

Property Price:	€180,000
Initial taxes due @ 4%
Selling Price:	€250,000
CGT @ 20%

Situation A: buyer inputs the actual price in the Notary Deed:
Purchase stage:

Notary Deed price:	€180,000
Tax due (€160,000 @ 4%:)	€ 7,200

Selling stage:
Sale Price:	€250,000
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

Situation B: buyer inputs a reduced price in the Notary Deed:
Purchase stage:

Notary Deed price:	€140,000
Tax due (€160,000 @ 4%:)	€5,600

Selling stage:
Sale Price:	€140,000
CGT @ 20% of gain
(€250,000 - €140,000)	€110,000
CGT due	€22,000
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.

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.

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.

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

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)

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.

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.

You can post your application to the following address:
Property Tax International,
Overseas Processing Department,
12-14 College Green,
Dublin 2,
Ireland