European properties vary in quality. Most non-Europeans are surprised to find out that this highly developed continent has house price statistics that differ greatly. Scandinavian countries generally have outstanding house price stats. As a result, this affords greater yields and capital growth for most investors. Property lease tax in Europe varies per country as shown below:
Albania has had massive changes upon introduction of their tax legislation in 2016. All personal income tax is subject to a tax rate of 15%. Tenants must pay a final withholding tax of 15% but income on property lease tax may be exempt from withholding tax if the taxpayer can provide proof of tax registration in Albania.
Bosnia and Herzegovina
Bosnia and Herzegovina property lease tax follow two separate tax rates depending on the political entities: FBiH or Federation of Bosnia and Herzegovina and RS or Republika Srpska.
For rental income in FBiH, it is taxable at the rate of 10%. For RS, the rental income is based on capital income where it is taxed at 10%.
Property lease tax in Bulgaria for non-residents are withheld at source at 10%. This tax due must be remitted on a monthly basis. If the foreigner’s country of origin has a tax treaty with Bulgaria, they can remit the taxes on a quarterly basis.
Income generated from the rental of property in Croatia is subject to a 12% rate. Allowed deductions are up to at 30% of the total gross rent. A city surtax may be added if necessary. This surtax is levied above the tax due at the given rates:
- Up to 10% for communities
- A maximum of 12% for cities with a population of less than 30,000
- At least 15% for cities with a population of more than 30,000
- Maximum of 30% for the capital city, Zagreb
According to the tax legislation, taxpayers can reduce property lease tax when they incur expenses up to 30% lump sum or up to CZK300,000. Similarly, non-Czech Republic residents must pay a property lease tax of 15%.
Non-residents earning profit from leasing out their properties will be charged with income tax if the immovable subject to a residential or commercial lease or under limited real rights is in Estonia, the movable subject to a residential or commercial lease or under limited real rights is subject for entry in an Estonian register.
Rental income earned in Hungary is subject to a flat rate of 15%. Costs and expenditures that are not, in any way, related to the core business activities are not deductible from corporate income tax purposes. For regular businesses costs, no limitation is specified. Taxpayers, however, must keep a complete record of all costs to improve or repair the property. Oftentimes, taxpayers include consultation and financing expenses as part of the investment value. Given this, future expansion and improvements may also be taken into account.
Non-residents earning from rental income in Latvia must pay an income tax rate of 20%. The country allows property taxes and depreciation expenses as deductions for tax payments.