Published on 11 July 2013

A cautionary note for landlords who live away from their own countries.

In some countries the basis of taxing individuals is dependent on their citizenship (e.g. USA) while in others it is dependent on their residency.

A further complication occurs because if you have income arising in a country of which you are neither resident nor a citizen that country will have the first right to tax that income.

So you may find you have to report your income to three tax authorities.

Take for example a US citizen living in Spain with investment property in the UK. The income will be taxed first of all where it arises – in the UK. Then the worldwide income of the Spanish resident individual has to be reported to the Spanish tax authority. And finally because our landlord living in Spain is a US citizen he or she has to report worldwide income to the IRS in the US.

Will this mean our landlord gets taxed three times? Probably not. The arrangements between most countries set out where the income is taxed – but it still has to be reported in most countries even if it creates no tax liability. These arrangements are contained in Tax Treaties. If our UK landlord is resident in a country with which there is no tax treaty then full tax may be payable in both countries, and if he/she is a citizen of a third country where citizenship matters, and with which there is no tax treaty some tax liability may arise in that country.

Landlords Tax Services Ltd deals with the UK taxation obligations of its clients, and does not act for them in connection with their obligations in other jurisdictions. If you think this situation might apply to you then you should seek local advice. Don’t get caught out.