Global Property Guide

Financial Information for Residential Property Buyers


Tax Example: Rent

November 11, 2016

Non-resident couple's joint monthly rental income1 €1,500 €6,000 €12,000
Annual Rental Income 18,000 72,000 144,000
Less Annual Allowance2 (5,143)3 (22,041)4 (44,082)5
Less Costs (15%)6 (2,700) (10,800) (21,600)
Less Real Estate Tax (343) (1,469) (2,939)
= Net Rental Income 9,814 37,690 75,380
Additional Fictional Tax Base7 16,000 16,000 16,000
= Taxable Income 25,814 53,690 91,380
Income Tax Rates
Up to €10,000 nil - - -
€11,000 - €18,000 25% 1,750 1,750 1,750
€18,000 - €31,000 35% 2,735 4,550 4,550
€31,000 - €60,000 42% - 7,942 12,180
€60,000 - €90,000 48% - - 14,400
€90,000 - €1,000,000 50% - - 688
Over €1,000,000 55% - - -
Annual Income Tax Due €4,485 14,242 33,568
Tax Due as % of Gross Income 24.92% 19.78% 23.31%
Thanks to:
Ginthoer & Partner

DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on October 20, 2015.

Notes


1 The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner).

2 Exchange rate used: 1.00 EUR = 1.00 EUR

3 (3) According to local laws, the annual allowance for buildings subject to rent amounts to 1.5% of the aquisision costs in the case that no evidence of the useful life s provided. In these cases, this rule is utilized.
(3-1) Acquisition costs of the property are € 342,854 ( 342,854 * 1.50% = 5,143 )
(3-2) Acquisition costs of the property are € 1,469,388 ( 1,469,388 * 1.50% = 22,041 )
(3-3) Acquisition costs of the property are € 2,938,776 ( 2,938,776 * 1.50% = 44,082 )

4 Income-generating expenes are deductible. In these cases, it is assumed that income-generating expenrses are around 15% of gross income.

5 The tax base of each nonresident individual is fictionally increased by €8,000. [Section 102 (3) IITA]

6 (6) Net rental income is taxed at progressive rates.

INCOME TAX 2016

TAXABLE INCOME (€) TAX RATE
Up to €11,000 0%
€11,000 - €18,000 25%
€18,000 - €31,000 35%
€31,000 - €60,000 42%
€60,000 - €90,000 48%
€90,000 - €1,000,000 50%
Over €1,000,000 55%

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