If you're renting an apartment in Spain and are a Polish tax resident, you should remember that rental income must be taxed in both Poland and Spain. Fortunately, there's a way to avoid double taxation.
How to settle rental income in Spain?
You'll pay tax first in Spain, as that's where your rental property is located. Spanish law determines the rates and rules for taxing rental income.
How to settle income in Poland?
As a Polish tax resident, you must account for your rental income in Poland because Polish law requires tax residents to account for all their worldwide income. This means that even though you paid tax in Spain, you must also include this income in your annual tax return in Poland.
How to avoid double taxation?
Fortunately, Poland and Spain have a double taxation treaty. Thanks to this agreement, you can deduct the appropriate portion of the tax paid in Spain from the tax you owe in Poland on rental property in Spain.
In practice, this means that a properly calculated portion of the tax paid in Spain will be deductible from the tax you will have to pay in Poland, thus avoiding double taxation of the same income.
Have questions about settling income from rental properties abroad? Contact our law firm – we will help you avoid double taxation and correctly settle your rental income in Poland and abroad.
