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I want to buy a property outside the Netherlands. What are the tax consequences?

Question

I am French, living in the Netherlands and thinking of purchasing a property in France.

How will this property be taxed given I am NL domiciled and NL resident (not under 30% ruling). Will the position be different depending on whether I have a mortgage on the property?

Answer

Since you are living in the Netherlands (and don't have the 30% ruling) you will have to declare your worldwide savings and investments in the Dutch tax return, so including a property you own in France. However, under the tax treaty between France and the Netherlands the right to tax a property is divided to the country in which the property is located. This means that France will have the first right to tax the property. The Netherlands will offer an exemption to prevent double taxation. This exemption must be claimed in the income tax return. A mortgage will not affect anything since the exemption will also be calculated including the mortgage. So whether or not you have a mortgage the exemption will be calculated the proper way.

If you rent out the property then you don't have to declare the actual rent you received nor can you deduct expenses in your Dutch tax return. It depends on France how this income will be taxed there. 

 
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