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Tax on foreign rental income

  • 31-08-2015 4:34am
    #1
    Acara
    Registered Users, Registered Users 2 Posts: 136 ✭✭


    If person lives and works (paye) in Ireland but also has income from rental of a property in Portugal where does he pay tax on this rental income. Also if this person was gifted this property by his father in the first place should he not have to pay a gift tax?


Comments

  • #2
    Peregrinus
    Registered Users, Registered Users 2 Posts: 27,086 ✭✭✭✭Peregrinus


    Acara wrote: »
    If person lives and works (paye) in Ireland but also has income from rental of a property in Portugal where does he pay tax on this rental income.
    In both countries. But the tax he pays in Portugal can be offset against his liability to tax in Ireland. So if he has, say 1000 euros of income from the property, and he pays tax in Portugal at 30% (I'm pulling this figure out of the air; I have no idea what the rate of Portuguese tax will be) that's 300 euros. His Irish tax is also calcuated on the same 1000 euros of income and let's say the rate is 40%, so that's a liablity of 400 euros. He deducts the 300 euros he has already paid in Portgugal, and only has to pay 100 euros in Ireland.

    As you can see, the net result of this is that he will pay tax at the higher of the Irish and Portuguese rates.
    Acara wrote: »
    Also if this person was gifted this property by his father in the first place should he not have to pay a gift tax?
    If either he or his father was resident in Ireland at the date the gift was made, then it's within the charge to Irish gift tax. Whether there will be a liablity, or how much it will be, depends on the value of the property, the other gifts the donee has received, and other factors.

    There is also a gift tax in Portugal, but I don't know the details. In particular I don't know if it applies to a gift of portuguese property from one non-resident to another. You'd need to take Portuguese advice on that.

    The Ireland-Portugal Double Tax Agreement doesn't deal with gift or inheritance taxes, so if there is a liablity to both the same "set-off" of one tax against the other is not available.


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