Real estate transfer taxes
Taxes on real estate transfer exist in almost every country and are usually charged as a percentage of the purchase price. This is part of your investment cost and must be factored in before the investment.
Annual property tax
An annual tax for ownership of property is common in most countries in Europe. One notable exception is Malta, which does not tax owners for their property after the initial purchase.
Local inheritance laws
Local inheritance laws and gift taxes must also be considered in the property purchase since they are core components of a comprehensive residency investment plan. In-depth knowledge of local inheritance laws is necessary, as the specific requirements can be difficult to interpret depending on individual circumstances. Spain, for example, has a progressive inheritance tax which is calculated as a percentage of the inherited property. In contrast, Portugal does not impose any inheritance tax on its citizens.
Equally important are mandatory inheritance laws, in which immediate family members (usually the spouse, and then children) are obligatory inheritors. Depending on investors’ official residency and citizenship, some countries may apply the inheritance laws of the country of origin. The complexity of the interpretation of inheritance and gift tax laws means that it’s essential for investors to seek local advice from an expert before making a property investment.
Capital gains tax and property sale taxes
When investing in foreign property, it’s important to consider not just the terms of the purchase of a property, but also the sale. Capital gains tax can be up to 50% or more in some countries in Europe, and the percentage that you pay can also depend on whether you’re a resident or not in the country. Changes in legislation can occur after your purchase, but it’s important to have a clear understanding of the terms of the sale and the taxes investors may incur.
Citizenship and residency restrictions
Residency and citizenship rights are not the same in every European country, and the entitlements you may receive from the investment varies from program to program. For this reason, it’s important to consider whether residency investments allow access to the Schengen zone, and what type of visa and freedom of movement agreements the country has with other nations around the world. Some passports in Europe are more powerful than others when it comes to travel and business agreements, and this should always be factored in your decision.
Tax planning will always be a key priority when making residency investments. We find workable solutions that fit your unique circumstances and desired investment.
Pick a licensed investment firm
When you’re ready to commit to investing in a property abroad, it’s important to choose one that’s government-licensed to operate. For example, both Global Citizen Solutions and its real estate division — Goldcrest — hold forth unique license numbers.
AMI Registration 17987