How are taxes on rental income from foreign properties calculated?
March 23, 2022 | 50,00 EUR | answered by Mia Pilz
Dear tax advisor for property taxation,
my name is Sophia Richter and I have a question regarding the taxation of rental income from foreign properties. I own a vacation apartment in Spain which I rent out. So far, I have mainly dealt with tax returns in Germany and am familiar with the taxation of rental income here. However, I am unsure about how taxes on the income from my Spanish property are calculated.
Currently, I have not yet filed a tax return in Spain as the procedure is unfamiliar to me and I am not sure how to proceed. My concern is that I may have to pay taxes in both countries and end up losing a lot of money. Therefore, I am looking for ways to minimize my tax burden and avoid potential double taxation.
Can you explain to me how the taxation of rental income from foreign properties generally works? Are there any specific regulations or agreements between Germany and Spain that could help me? What exact steps do I need to take to fulfill my tax obligations in Spain properly and take advantage of any benefits?
Thank you in advance for your help and support. I look forward to your expert advice.
Sincerely,
Sophia Richter
Dear Mrs. Richter,
Thank you for your inquiry regarding the taxation of rental income from foreign properties, specifically your vacation home in Spain. It is understandable that the tax regulations in another country can bring some uncertainty. I am happy to explain to you how the taxation of rental income from foreign properties generally works and what steps you should take to fulfill your tax obligations in Spain properly.
In general, rental income from foreign properties is subject to taxation in the country where the property is located. In your case, this means that the rental income from your vacation home in Spain must be taxed there. It is important to note that Spain has a double taxation agreement with Germany to avoid double taxation. According to this agreement, the tax burden on your rental income is usually paid in the country where you are tax resident.
To properly fulfill your tax obligations in Spain, you should file a tax return in Spain. You must declare the rental income from your vacation home and pay taxes accordingly. It is advisable to consult a local tax advisor who can assist you in preparing and submitting your tax return. They can also help you take advantage of possible benefits and tax breaks to minimize your tax burden.
It is important that you collect and keep all relevant documents and receipts to prove your rental income from your vacation home in Spain. This way, you can be well prepared to respond to any inquiries from the Spanish tax authorities.
I hope this information helps you and supports you in fulfilling your tax obligations in Spain. If you have any further questions or would like more detailed advice, I am at your disposal.
Sincerely,
Mia Pilz
Tax Advisor for Real Estate Taxation
