property lease tax europe

Real estate investments are one of the profitable options to include in one’s portfolio. In Europe, rental yields are still profitable because the European property market is slowly picking up post-Brexit. Thanks to the European Central Bank’s (ECB) policy of maintaining low interest rates, most property investors are still able to realise their profit through rental properties. Here is our guide to paying property lease tax in Europe:

Paying Property Lease Tax in Europe

Andorra

Non-residents of Andorra earning a rental income is subject to a flat rate of 10%. The landlord is responsible for paying the tax on house rents, which are levied on rental income at a minimum of 0.4% and a maximum of 4%. 

Austria

The taxable rental income is Austria is computed in excess of receipts that are over the expenses related to the property. Maintenance, repairs, administrative expenses, depreciation, interests, and real estate taxes are deductible. Non-residents have a tax base increase of €8,000. Lease contracts have a stamp duty ranging from 0.8% to 2%. 

Azerbaijan

Non-residents of Azerbaijan earning rental income must pay a flat withholding tax rate of 14%. The government does not allow deductions. 

Belarus

Individuals earning from leasing out their properties must pay an income tax of 13% flat rate. 

Belgium

Property owners are required to pay an annual tax based on ownership every 1st of January. The total amount is based on annual rental value with a tax paid depending on the region and the commune. In the Brussels-Capital Region, the rate is 2.25% of the annual deemed rental income. In the Flemish Region, the rate is 2.5% and 1.25% in the Walloon region. 

Bulgaria

The property lease tax in Bulgaria is 10% of the rental income. Tax settlement is quarterly, with the final 10% due along with the annual tax return. 

Cyprus

Foreigners earning rental income from an immovable property are must pay only the Cyprus Income Tax and not the Special Defence Contribution, which imposes a tax rate of 3% on 75% of the gross rental. 

Denmark

In Denmark, foreigners only pay property lease tax if their rental income exceeds the basic allowance. Tenants subletting the apartment have a basic allowance that is equal to two-thirds of the annual rent. Due to this allowance, the tax payments of tenants in Denmark are lesser. Landlords may not pay the tax if the rental income does not go over DKK 24,000 annually or 1.33% of the property’s value in the income year. 

Finland

In Finland, the property lease tax is under the capital income and has a progressive tax rate from 30% to 34%. 

France

Foreigners earning rental income whether residing in France or not must pay property lease tax. Those residing in the US, but has a rental property in France, for instance. For rental income of up to €27,519, the tax rate is 20% of the net income. If it exceeds, the tax rate becomes 30%. 

Germany

Tax payments for Rental income in Germany use progressive rates. Depreciation is 2% for established homes, 3% for newly built houses for the first eight years. Any income-generating expenses are deductible only in the year it was done and provided the cost is not more than 15% of the purchase price. 

Read Part 4 of our Guide to Paying Property Lease Tax in Europe

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