What tax regulations apply to the rental of vacation apartments abroad?
June 5, 2022 | 40,00 EUR | answered by Johann Lauer
Dear tax advisor,
My name is Jessica Voigt and I have been successfully renting out holiday apartments abroad for several years. So far, I have mainly focused on renting out in Germany and am familiar with the tax regulations here. However, I am now planning to also offer holiday apartments abroad and am unsure about the tax regulations that apply there.
Currently, I rent out a total of five holiday apartments in Germany and make a good profit from it. Since the holiday apartments abroad also have a good demand, I would like to expand my portfolio. However, I am concerned that the tax regulations abroad might be more complicated than in Germany.
My concerns particularly relate to questions such as the taxation of rental income abroad, the deductibility of advertising costs, and possible double taxation. I am also worried about determining the taxable income and paying VAT.
Therefore, my question to you is: What are the tax regulations for renting out holiday apartments abroad? Are there any specifics I need to be aware of, and what tax benefits could I possibly take advantage of? How can I avoid possible double taxation and what documents do I need to prepare for the tax return abroad?
Thank you in advance for your support and expertise.
Best regards,
Jessica Voigt
Dear Jessica Voigt,
Thank you for your inquiry regarding the tax regulations for renting holiday apartments abroad. It is understandable that you are concerned about possible differences compared to regulations in Germany and would like to inform yourself about the tax consequences.
First and foremost, it is important to note that tax regulations for renting holiday apartments abroad can vary depending on the country. However, there are some general aspects that you should consider.
Usually, rental income from renting holiday apartments abroad is taxed in the landlord's country of residence. In general, you can also deduct expenses such as maintenance costs, management fees, or financing costs to reduce your taxable income.
To avoid possible double taxation, you should check if there is a double taxation agreement between your country of residence and the country where the holiday apartments are located. These agreements are intended to ensure that income is not taxed twice and usually determine which country has the right to tax.
For tax filing abroad, you should gather all relevant documents, such as rental agreements, receipts for expenses, income and expense statements, and any documents proving your rental income. It may also be advisable to consult a local tax advisor who is familiar with the local tax regulations and can assist you in preparing your tax return.
There are also some tax benefits that you may be able to take advantage of, such as the ability to depreciate the holiday apartments or make certain investments tax-deductible. A tax advisor can help you with this and point out individual optimization possibilities.
Overall, it is advisable to inform yourself early on about tax regulations abroad and possibly seek professional help to minimize potential tax risks and benefit from tax advantages.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Johann Lauer
