I don’t have DTA knowledge wrt CH-PL, but it being EU there should be something standard about it, so I second @nabalzbhf’s comment. You do declare it, but CH tax authorities should use it for calculating your tax rate only. Wait for the final calc & it’ll probably be like that, which is long overdue on the authorities part btw. If CH want to tax you on the Polish income, it’d have to be looked at more closely, what does the DTA say etc.
What’s the tax rate % on that rental income in PL compared to your CH tax rate? If PL is lower than CH, CH could charge tax on this difference, as that wouldn’t be double taxation.
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There are two ways - either you pay ~8.5% (I’m not fully sure about this number) from the full rental income, without the possibility to deduct any costs you have or you pay normal income tax, which I think is 18% and then 32% for the incomes higher than ~85 000 PLN per year. So far I was doing the latter, because the rental contract is written in a way that I pay all costs for the apartment.
Real estate are taxed in the country they are situated.
However, you have to mention this property (and all related elements --> rental income, debt, debt interests, expenses etc) in your Swiss tax return.
As mentioned above, these elements will be considered in Switzerland for tax rate determination only.
International allocation will apply on the foreign debt interests (if any). A portion will be allocated to Switzerland.
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This is actually not as easy. All depends on the double taxation agreement between both countries, and actually the tax principles in the country you live in and the real estate is.
For example some countries only tax income made inside their territory (Costa Rica and some others, it is a minority), others, such as Switzerland will tax the worldwide revenues of their residents. However, they will often have double taxation agreements in place between both countries.
For the Swiss taxes point of view, I have no doubt on the method described (exemption with progression) above for foreign real estate.
Coming from my personal experience (rental property in France), as well as my professional practice (working in the Swiss tax field for more than 10 years).
Exception may apply if there is no double tax treaty in place.
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Many thanks for all replies - I feel quite convinced now that I’m doing the right thing. Once I finally get the calculation, I’ll just double check if I was not taxed on it :).
Plus - some small side story :). As regards the taxes, I always tried to be on the safe side, even though sometimes I had a feeling that I pay a bit more.
15 years ago when we bought the mentioned apartment, it was possible in Poland to get back TVA spent on materials to renovate/construct your property. Unfortunately, it was quite complicated and unclear what exactly could be deducted. But I played safe and few months after I was requested to come to the tax authorities with all the invoices to verify everything…
Guess what - I ended up with bigger tax refund, because the clerk there was so nice that she was going through all positions on the invoices (not only deducted ones) and whenever she saw something I haven’t had deducted, she did it for me :).
That was really unexpected, but it shows that a lot depends on the real person you are dealing with.
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Found a nice doc supporting this!
Page 17 onwards.
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Many thanks, quite a nice doc overall, I wish I had it before moving to Switzerland :).
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I got it (for 2019, not yet for half of 2018) - everything is as expected - my income from Poland was just used to calculate my tax rate. This is fine. The thing I don’t like, is that (as usual), I have to pay >6k more, even though they didn’t deny any of declared things supposed to lower the tax bill (maxed 3a x2 (me and my wife), even travelling to work by car, creche costs, etc.).
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Hi Baldur, I am in a similar situation but to be frank, I am still confused by the Polish system. Given the recent changes in tax law for people living abroad (and potentially more to come), I officially informed the tax authorities that I live abroad. Until now, I just thought it is enough if I have my permanent address in another country but apparently, this is not the case. Also, until now, I have been only filling in PiT 28, I think there is only one field asking you about other income, should I include all my income from abroad or just the taxes I pay abroad?
Yes, as far as I know permanent address is not enough - you should have your “centre of life interests” (not sure if I translate it well…) abroad. E.g. living more than 180 days abroad etc.
Unfortunately I don’t know, as I’m not using PIT 28 (lump sum taxation). I declare what I earn from renting as a normal income, which allows me to deduct the costs. What I thought so far is that I would be able to avoid declaring my foreign income if I switch to PIT 28, but so far I never switched.
Income from rent is and was my only source of money from Poland so I always only used PIT-28, I didn’t even know that you should actively switch…
I just checked and it seems it has changed and now it is not required to explicitly declare that you choose the lump sum taxation at the beginning of the year. I found it here: https://direct.money.pl/artykuly/porady/jak-rozliczyc-prywatny-najem-mieszkania,75,0,1560651. Would be glad if anyone from Poland could confirm that :).
I just visited the tax office and no one mentioned that I have to “declare” the choice of tax declaration but the lady also mentioned that the rules might change before March 2nd and I shouldn’t be declaring my taxes soooo much in advance 