How does double taxation affect my rental income?
May 16, 2022 | 125,00 EUR | answered by Isabel Zimmermann
Dear tax advisor,
I am Gerda Heck and I own a multi-family house from which I regularly earn rental income. In the past, I have noticed that my income from rental income is taxed in both my country of residence and the country where the multi-family house is located. This results in double taxation for me, which significantly burdens my financial situation.
Currently, I am unsure how to deal with this double taxation and what options exist to avoid or at least minimize it. I am concerned that this additional tax burden could significantly reduce my income from rental income and affect my financial planning.
Could you please explain to me how double taxation affects my income from rental income exactly and what tax measures I can take to improve this situation? Are there perhaps specific tax treaties between the two countries that could help me in this case? Or are there other tax optimization options that I should consider?
I would be very grateful if you could provide me with your expertise and assist me in overcoming this tax challenge.
Thank you in advance for your support.
Best regards,
Gerda Heck
Dear Mrs. Heck,
Thank you for your inquiry regarding double taxation in relation to your rental income from the apartment building. It is understandable that double taxation is impacting your financial situation and that you are looking for ways to minimize this additional tax burden.
Double taxation occurs when the same income is taxed in two different countries. In your case, this means that both your country of residence and the country where the apartment building is located tax your rental income. This can lead to a significant burden and can significantly reduce your income from rental earnings.
There are various ways to address and minimize double taxation. One option is to use Double Taxation Agreements (DTAs) between the two countries involved. These agreements aim to avoid or at least reduce double taxation by establishing rules for the allocation of taxing rights between the contracting states. It is important to check whether such a DTA exists between your country of residence and the country where the apartment building is located and how it applies to your specific situation.
Another way to minimize double taxation is to make use of tax optimization opportunities available to you. This includes, for example, choosing the optimal tax classes and utilizing depreciation options for the apartment building. It may be advisable to consult with an experienced tax advisor who can assist you in tax planning and optimizing your situation.
Overall, it is important to address the issue of double taxation and take appropriate measures to minimize your tax burden. I recommend contacting a specialized tax advisor who can help you deal with this tax challenge.
I hope that my information is helpful to you and I am available for further questions.
Best regards,
Isabel Zimmermann
Tax Advisor
