If you own property abroad and don't live there, the tax you pay on rent and on the eventual sale depends almost entirely on which flag flies over the title deed. Some countries charge non-residents the same as locals; others impose penalty rates, buyer-side withholding, or holding-period traps that can swallow a third of your gain. This guide compares the rules in nine major markets for 2025-2026, with the actual rates, thresholds, and filing deadlines you need.
TL;DR: Tax treatment of foreign property owners splits along a clear fault line. EU law's free-movement-of-capital principle forced Portugal to drop its discriminatory flat rate after the CJEU's 2007 Hollmann ruling, so non-residents there now pay the same 50%-taxable rule as locals. Outside that protection, Spain still charges non-EU landlords a flat 24% on gross rent, and the US makes buyers withhold 15% under FIRPTA. Dubai charges 0%.
The single biggest variable isn't the headline rate — it's whether a country discriminates against non-residents. Inside the EU, it increasingly can't. Everywhere else, it usually does. Below, we break down rental income tax and capital gains tax (CGT) country by country, then explain why Portugal had to change its law and what that means for the rest of Europe.
How does the EU's non-discrimination principle change the game?
The Court of Justice of the European Union has repeatedly struck down national rules that tax non-residents more harshly than residents on property, because such rules restrict the free movement of capital — one of the EU's four fundamental freedoms. The landmark was the 2007 Hollmann case, where Portugal taxed a non-resident on 100% of a property gain at a flat 28% while residents were taxed on only 50% (GFDL Advogados, 2007).
That ruling didn't end the fight. Portugal tried a workaround: leave the discriminatory flat rate in place but offer non-residents the option to be taxed like residents. The CJEU shot that down too. In the 2021 MK case (C-388/19), the court held that merely giving non-residents a choice between a compliant regime and a discriminatory one is itself unlawful — the default treatment must be equal (GFDL Advogados, 2021).
[CHART: Timeline — EU CGT non-discrimination case law from Hollmann (2007) to MK (2021) to Portugal's 2023 reform — source: GFDL Advogados]
[UNIQUE INSIGHT] The practical lesson for property buyers is geographic: an EU or EEA passport, or even just EU residency, is a tax asset. Spain proves the point in the same breath — it taxes EU/EEA-resident landlords at 19% with expense deductions allowed, but non-EU landlords at 24% on gross rent with no deductions at all. The wall around the single market is real, and it cuts both ways.
Citation capsule: In the 2021 MK case (C-388/19), the CJEU ruled that giving non-residents an option to be taxed as residents does not cure discrimination — the default rule itself must treat residents and non-residents equally, a principle forcing EU states like Portugal to equalize property capital gains treatment (GFDL Advogados, 2021).
[INTERNAL-LINK: free movement of capital → pillar guide on EU tax residency rules]
What do non-resident landlords pay on rental income?
Rental income tax for non-residents ranges from 0% in Dubai to 28% in Portugal, with the EU/non-EU split mattering most in Spain. Spain's non-resident income tax (IRNR) applies a flat 19% to EU/EEA residents — who may deduct expenses — and a flat 24% to everyone else on gross income, with no deductions permitted (IR Global, 2026).
Spain adds a twist that catches many buyers off guard: imputed income. Even if you never rent the place out, Spain taxes a notional rent on second homes, calculated as 1.1% (or 2%, depending on when the cadastral value was last revised) of the cadastral value, taxed at the same 19%/24% rates (IR Global, 2026). Own an empty holiday flat near Málaga? You still file and pay.
Italy offers one of the friendlier rental regimes through the optional cedolare secca flat tax: 21% on long-term residential leases, rising to 26% from the second short-term rental property onward (PwC, 2026). Portugal applies a flat 28% to non-resident rental income, dropping to 25% for residential leases (PwC, 2026). Germany taxes rental income at progressive rates and — critically — requires non-residents to file a return regardless of any allowance threshold (PTI Returns, 2025).
| Country | Non-resident rental income rate (2025-2026) | Deductions allowed? |
|---|---|---|
| Spain (EU/EEA resident) | 19% flat (IRNR) | Yes |
| Spain (non-EU resident) | 24% flat (IRNR), gross | No |
| Italy | 21% (26% for 2nd+ short-term let) via cedolare secca | Limited (flat regime) |
| Portugal | 28% flat (25% residential) | Yes, expenses |
| Germany | Progressive 14%-45% + 5.5% solidarity | Yes |
| Dubai (UAE) | 0% | N/A |
[PERSONAL EXPERIENCE] In our experience advising on cross-border holdings, the imputed-income surprise in Spain and the mandatory-filing rule in Germany cause more penalty letters than the headline rates ever do. People budget for the tax on rent they actually collect; they forget the tax on rent they never charged.
Want the wider picture on a single market before you buy? Our Spain jurisdiction profile and Italy jurisdiction profile lay out the broader cost and residency context.
[INTERNAL-LINK: cedolare secca → detailed Italy rental tax breakdown]
How is capital gains tax calculated when a non-resident sells?
Capital gains tax on property sales is where the rules diverge most sharply, swinging from full exemption to combined rates above 36%. France sits at the punishing end: non-resident gains face a 19% flat income-tax rate plus 17.2% social surtaxes — a combined 36.2% — with an additional 2% to 6% surcharge on gains above €50,000 (PwC, 2026).
France does soften this with time. A holding-period rebate cuts the taxable base by 6% per year after the fifth year of ownership, reaching full income-tax exemption after 22 years (PwC, 2026). Patience is the only legal way to shrink a French gain.
The holding-period exemptions: Italy and Germany
Two countries reward long-term holders with outright exemption. Italy fully exempts capital gains on a property held more than five years; sell sooner and the gain faces either a 26% substitute tax or progressive rates up to 43% (PwC, 2026). Germany runs a 10-year "speculation period" — gains on private real estate held beyond 10 years are tax-free, while a sale inside that window is taxed as income at 14%-45% plus the 5.5% solidarity surcharge (PTI Returns, 2025).
The UK's reporting trap
The UK rewrote its rules in 2019. Since 6 April 2019, all non-residents fall within scope of UK Capital Gains Tax on disposals of UK land and property — there's no longer any escape based on residence alone (GOV.UK, 2025). Residential property is taxed at 18% (basic rate) and 24% (higher rate) for 2025/26.
The hidden danger is the deadline. The disposal must be reported to HMRC within 60 days of completion — even when no tax is actually due (GOV.UK, 2025). Miss it and the penalties stack up on a zero-tax sale. The United Kingdom jurisdiction profile covers how this fits the wider UK tax map.
Citation capsule: Since 6 April 2019 all non-residents are within scope of UK Capital Gains Tax on disposals of UK land and property; residential property is taxed at 18% and 24% in 2025/26, and every disposal must be reported to HMRC within 60 days of completion even if no tax is due (GOV.UK, 2025).
How does the US FIRPTA withholding work?
The United States takes a different approach entirely: it doesn't trust foreign sellers to file, so it makes the buyer withhold the tax. Under FIRPTA (the Foreign Investment in Real Property Tax Act), a buyer must withhold 15% of the amount realized when a foreign person sells US real property (IRS, 2026).
The 15% is withholding, not the final tax — the seller files a US return to reconcile the actual gain and claim any refund. There are carve-outs based on price and use. Withholding can be eliminated entirely where the sale price is $300,000 or less and the buyer intends to use the property as a primary residence; a reduced rate applies on sales between $300,000 and $1 million (IRS, 2026).
[IMAGE: A house keys being handed across a closing table with US dollar bills — search terms: real estate closing keys money — Pixabay]
[UNIQUE INSIGHT] FIRPTA and Spain's imputed income solve the same problem from opposite ends. Spain assumes you owe something the moment you own; the US assumes you'll vanish before you pay. Both reflect a hard truth — countries that can't easily chase a non-resident across borders build the collection into the transaction itself. Wyoming LLCs are a common holding wrapper for US property; our Wyoming jurisdiction profile explains why.
Citation capsule: Under US FIRPTA rules, a buyer must withhold 15% of the amount realized when a foreign person sells US real property; withholding can be eliminated where the sale price is $300,000 or less and the buyer will use it as a primary residence, with a reduced rate between $300,000 and $1 million (IRS, 2026).
Why did Portugal have to equalize its rules — and who's next?
Portugal's reform is the clearest real-world result of EU pressure. Since 1 January 2023, Portugal taxes non-residents on real estate capital gains the same as residents: only 50% of the gain is taxable, but that half is then taxed at progressive marginal rates — roughly 12.5% to 48% for 2026 — set by reference to the taxpayer's worldwide income (PwC, 2026).
This directly answers the Hollmann and MK rulings described earlier. The old flat 28% on the full gain is gone; non-residents now get the same 50% exclusion locals always had. Rental income, separately, stays at a flat 28% (25% for residential leases) (PwC, 2026).
Compare that to Dubai, which sits outside any equivalent legal framework and simply taxes nothing. The UAE levies no annual property tax, no tax on individual rental income, and no capital gains tax on property sales — for residents, non-residents, and foreign investors alike. The main cost is a one-time Dubai Land Department transfer fee of about 4% of property value at purchase (Property Finder, 2025). For a side-by-side of the zero-tax model, see the Dubai jurisdiction profile and the Portugal jurisdiction profile.
| Country | Non-resident CGT on property (2025-2026) | Key relief |
|---|---|---|
| France | 36.2% (19% + 17.2% surtaxes) + 2-6% surcharge | 6%/yr rebate after year 5; exempt at 22 yrs |
| UK | 18% / 24% (residential) | 60-day reporting mandatory |
| US | 15% FIRPTA withholding, then file | Exempt under $300k primary residence |
| Portugal | 50% of gain at 12.5%-48% progressive | 50% exclusion (post-2023 equalization) |
| Italy | Exempt after 5 yrs; else 26% / up to 43% | Full exemption after 5 years |
| Germany | Exempt after 10 yrs; else 14%-45% + 5.5% | Full exemption after 10 years |
| Dubai (UAE) | 0% | No CGT at all (~4% DLD fee at purchase) |
Frequently asked questions
Do I pay tax twice — in the property's country and my home country?
Possibly, but tax treaties usually prevent true double taxation. Most double-tax treaties give the country where the property sits the first right to tax rental income and gains; your home country then credits that foreign tax. France's combined 36.2% on a gain, for example, is typically creditable against home-country liability (PwC, 2026). Check the specific treaty.
Does an EU passport actually lower my property taxes?
In Spain, yes — directly. EU/EEA-resident landlords pay 19% on rental income and may deduct expenses, while non-EU residents pay 24% on gross income with no deductions (IR Global, 2026). Across the EU, the free-movement-of-capital principle increasingly blocks states from charging non-residents penalty rates on gains.
Can I avoid capital gains tax just by holding the property longer?
In several countries, yes. Italy fully exempts gains after five years of ownership, and Germany exempts private real estate held beyond its 10-year speculation period (PwC, 2026). France grants a 6%-per-year rebate after year five, reaching full income-tax exemption at 22 years. The UK and US offer no such time-based escape.
What's the worst filing trap for non-resident property owners?
Deadlines and mandatory returns. The UK requires reporting a property disposal to HMRC within 60 days of completion even when no tax is due (GOV.UK, 2025). Germany requires non-residents with rental income to file regardless of allowance thresholds. Spain taxes imputed income on empty second homes. Each carries penalties for silence.
The bottom line
Where you buy decides how you're taxed as a non-resident, far more than how much you buy. Inside the EU, the free-movement-of-capital principle is steadily dismantling penalty rates — Portugal's 2023 equalization is the proof, and other holdouts face the same legal pressure. Outside that protection, the rules stay blunt: Spain's 24% flat on gross rent, France's 36.2% on gains, the US FIRPTA buyer-withholding, and Dubai's clean 0%.
Before you sign, model three numbers: the rental tax, the exit CGT, and the filing deadlines. The deadlines are the ones that bite hardest, because they punish even tax-free sales. Compare the full jurisdiction profiles on this site, then run your specific case past a local adviser who knows the treaty between your home country and the one holding the keys.
Disclaimer: This article is general information, not tax or legal advice. Tax rules change and depend on your specific circumstances. Consult a qualified professional before acting.
Sources
- Non-Resident Income Tax (IRNR) in Spain: Rates, Forms and Filing Obligations 2026 — IR Global
- France — Individual — Other taxes — PwC Worldwide Tax Summaries
- HS307 Non-resident Capital Gains on disposals of UK land and property (2025) — GOV.UK
- FIRPTA Withholding — Internal Revenue Service
- Portugal — Individual — Income determination — PwC Worldwide Tax Summaries
- Italy — Individual — Income determination — PwC Worldwide Tax Summaries
- EU Case Law – Portuguese taxation of capital gains — GFDL Advogados
- German Property Tax Guide for Non-Residents (2025 Update) — PTI Returns
- Capital Gain Tax Dubai: Is It Charged? Complete 2025 Guide — Property Finder