Ask a tax advisor on the topic of Rental / Leasing

Rental abroad

March 1, 2017 | 25,00 EUR | answered by StB Patrick Färber

Good day,

I recently acquired a share in a rented condominium in Switzerland. The apartment has multiple owners who collectively manage the property (community of owners). I am a resident and taxpayer in Germany.

Now to my questions:

Where do I need to declare income or possibly profit from the property in my tax return?

Where do I need to declare my expenses for the property in my tax return?

Where do I need to declare the tax paid in Switzerland in my tax return?

Thank you in advance.

Kind regards,

Questioner

StB Patrick Färber

Dear questioner,

Based on your inquiry and as a first orientation, I can provide you with the following information:

Firstly, you must file a tax return in Switzerland and record the (proportional) income minus expenses (according to Swiss tax law) as the property is located in Switzerland and Switzerland therefore has the right to tax. Taxes may be due on this income in Switzerland.

Since you stated that you are a resident in Germany and are subject to unlimited tax liability here, you must also declare the surplus (income minus expenses) in your German tax return.

Unfortunately, the double taxation agreement with Switzerland states that you must fully tax the rental income in Germany in this case. However, you are allowed to credit the taxes paid in Switzerland against German income tax (so-called credit method). As a result, you unfortunately pay the higher German tax level.

You must enter these income (income minus expenses) in Annex V and ADDITIONALLY in Annex AUS. You must also enter the taxes actually paid in Switzerland there. Then a credit against German income tax will be made.

Unfortunately, you must determine the rental income from Switzerland according to German tax principles. Therefore, if there are deviations in Swiss tax law, the surplus must be determined in a kind of reconciliation calculation according to German tax law.

I recommend that you consult a tax advisor locally to ensure that the first tax return is complete and correct.

Best regards