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Swiss, US rental taxes highest in OECD

Buy-to-let income tax rates are high in some foreign countries, but in others, rental income is completely tax free.

Switzerland imposes the highest taxes on rental income of non-resident landlords, according to a study on the tax situation in more than 90 countries around the world. The study has been conducted by Global Property Guide with contributions from leading accounting firms in each country. (Article)

The effective income tax rate in Geneva, Switzerland can be as high as 48.6% on a rental income of €1,500/month and 54.5% on income of €12,000/month.

Other OECD member countries that impose high effective tax rates, above 20%, include the US, Norway, Spain and Finland.

In Norway, the flat 28% rental income tax is combined with a progressive capital tax. Although deductions for operating costs and income-generating expenses are allowed, effective tax rates are still high, ranging from 27% to 31%.

Spain charges 24% withholding tax on the gross rental income of non-resident foreigners, no deductions are allowed. Finland, on the other hand, charges a flat 28% tax but all direct income-generating expenses are deductible. This leads to an effective rate of around 24% in Finland.

The importance of deductions is also highlighted in the case of France. The nominal income tax rate for non-residents is high at 25%. However, if the gross rental income on a furnished flat is less that €76,300 per annum, deductions of up to 72% can be made. Only the remaining 28% of gross income is taxed, amounting to an effective tax rate of only 7%.
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