Property Tax in Taiwan
Tax Rate on Rental Income |
|||
| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 20% | 20% | 20% |
Nonresident individuals—generally individuals present in Taiwan for less than 183 days during a calendar year—are subject to Taiwanese income tax on Taiwan-source income.
Income Tax
Taiwan applies different withholding and income-tax rates to nonresident individuals depending on the type of income.
Employment income is generally subject to an 18% withholding rate, subject to special rules for lower-paid short-term employment.
Other categories of Taiwan-source income can be subject to different rates.
Rental Income Tax
Rental income from Taiwanese real estate received by a nonresident individual is generally subject to 20% withholding tax.
The withholding is generally calculated on the gross rental payment, meaning the straightforward nonresident rental calculation is:
Gross rental income × 20% = rental income tax
The treatment is materially different from that of a Taiwan tax resident, for whom rental income can be included in consolidated income with deductions determined under the applicable rules.
Business Tax
Rental activity can also create Taiwanese business-tax consequences separately from individual income tax.
Taiwan's standard VAT/business-tax rate is 5%, although the precise treatment of residential letting depends on the landlord, nature of the rental activity and applicable exemptions or special rules.
Business-tax treatment should be determined separately from the 20% nonresident rental withholding tax.
Capital Gains Tax
Taiwan operates a specific House and Land Transactions Income Tax regime for qualifying real estate transactions.
For a nonresident individual, the applicable capital gains tax rate depends primarily on the property's holding period. Property held for two years or less is generally taxed at 45%, while property held for more than two years is generally taxed at 35%.
The tax is imposed on the taxable gain rather than the gross selling price. Taxable income broadly reflects the difference between the disposal proceeds and the tax-recognized acquisition cost, after taking into account qualifying acquisition, improvement and disposal expenses and the adjustments permitted under Taiwanese law.
A nonresident individual generally must file the applicable house-and-land transaction income-tax return within 30 days following completion of the ownership-transfer registration.
Land Value Increment Tax
Gains for the sale of land are exempt from income tax but are taxed under the Land Value Increment Tax (LVIT). Tax is computed based on incremental increases in the assessed value of the land from the last transfer. The tax rate varies from 20% to 40%.
Once the Land Value Increment Tax is paid, the capital gain will not be subject to income tax again. Loss from the sale of land cannot be reserved nor utilized to offset against the Land Value Increment Tax on other properties. For owner-occupied residential land, this tax is levied at a flat rate of 10% under certain conditions.
Land Value Increment Tax
Taiwan separately imposes Land Value Increment Tax (LVIT) when land is transferred. The tax is principally based on the increase in the government's assessed land value rather than the property's actual market-value gain.
The ordinary LVIT rates are progressive at 20%, 30% and 40%, while a preferential 10% rate can apply to qualifying owner-occupied residential land, subject to specific requirements.
The House and Land Transactions Income Tax and LVIT rules contain mechanisms to account for the land-value increment so that the same component of the gain is not simply taxed twice under both systems.
Corporate Tax
Taiwan's standard corporate income-tax rate is 20%.
Taxable income up to TWD 120,000 is generally exempt. Where taxable income exceeds TWD 120,000, the general 20% corporate rate applies, subject to the applicable transitional calculation around the threshold.
Taiwan resident companies are generally taxed on taxable net income after qualifying costs and expenses.
Foreign companies with a fixed place of business or business agent in Taiwan are generally taxed on Taiwan-source business income under the corporate income-tax regime. Different withholding rules can apply where a foreign company has no Taiwanese fixed place of business or business agent.
Real-estate transactions can also fall under Taiwan's specific House and Land Transactions Income Tax rules rather than simply being taxed under the ordinary 20% corporate rate.
Property Buying and Selling Taxes/Costs
| Tax Type | Rate |
| Property Transfer Tax | 6.00% |
| Agent Fee (Buyer) | 1.00% |
| Agent Fee (Seller) | 4.00% - 5.00% |
| Legal Fees | 0.10% - 1.00% |
| Notary Fee | 0.10% |
| Costs Paid By Buyer | 7.20% - 8.10% |
| Costs Paid By Seller | 4.00% - 5.00% |
| Roundtrip Cost | 11.20% - 13.10% |
| Source: Global Property Guide, Deloitte | |
Property Holding Taxes
House Tax
Taiwan imposes an annual House Tax on buildings. The tax is calculated by applying the applicable tax rate to the property's government-assessed house value, rather than its actual purchase price or current market value.
Under Taiwan's current differentiated residential property tax regime, owner-occupied residential properties that satisfy the applicable requirements generally benefit from preferential rates of approximately 1% to 1.2%.
Residential properties that do not qualify for owner-occupied treatment, including many investment properties and additional homes, are generally subject to substantially higher rates. Depending on the number of properties owned and the applicable local rules, non-owner-occupied residential property can generally be taxed at rates ranging from approximately 2% to 4.8% of the assessed house value.
Qualifying residential properties that are rented out and meet prescribed requirements can benefit from preferential treatment, with rates generally ranging from approximately 1.5% to 2.4%.
The applicable rate is determined under national legislation together with the relevant local-government rules. Because the taxable house value is a government-assessed value rather than the property's market value, the effective tax as a percentage of actual market value can be considerably lower than the headline House Tax rate.
Land Value Tax
Taiwan separately imposes an annual Land Value Tax on the land component of real estate.
The tax is based on the government's declared land value, rather than the property's actual market value.
Land that qualifies as owner-occupied residential land can benefit from a preferential 0.2% Land Value Tax rate, subject to statutory requirements.
Ordinary land that does not qualify for preferential treatment is generally subject to progressive Land Value Tax rates ranging from 1% to 5.5%, depending on the total taxable land value and applicable statutory thresholds.
Accordingly, a typical nonresident investor holding a Taiwanese residential apartment can potentially face both House Tax on the building component and Land Value Tax on the land component. However, because both taxes are based on government-assessed values rather than the apartment's full market value, the headline statutory percentages should not be interpreted as percentages of the property's purchase price.
