How a double tax treaty works for an EU tax resident who owns property in a third country: source and residence, credit and exemption, tie-breakers and proof of foreign tax.
If you live in an EU country and own an apartment in Turkey, the UAE, Georgia or another country outside your home state, two tax authorities may be interested in the same rent or the same sale profit. A double tax treaty is the document that decides who taxes what and how the second country gives relief. This article explains the logic in general terms. Treaties differ from pair to pair, so treat it as a map and not as an answer for your case.
Two questions a treaty answers
The first question is where you are resident for the treaty. Most treaties follow the OECD Model Convention, which we describe here from secondary descriptions of the Model (the OECD text itself was not available to us). The second question is which country may tax each type of income and how the other country avoids taxing it twice.
Your home state usually taxes your worldwide income because you are resident there. The country where the property stands usually also taxes income from that property because it is the source. The treaty allocates the rights between them.
Residence first: the tie-breaker rules
A treaty only helps if it is clear which of the two states is your state of residence. If both claim you, the Model Convention uses a sequence of tests: a permanent home available to you; if you have one in both states, the state with which your personal and economic ties are closer (centre of vital interests); then where you habitually live; then nationality; and if still unclear, the tax authorities agree between themselves.
Owning a property abroad does not by itself make you resident there, but a home that is permanently available to you can matter in a dispute. If you move between countries, read our note on tax residency when relocating.
Source and residence: what the treaty says about property
Under the Model, income from immovable property, such as rent, may be taxed in the country where the property is located. Gains from selling immovable property are usually also taxable there. This is a right to tax, not an obligation to tax at a particular rate, and the local rules of that country decide the rate and the form to file.
Your state of residence generally keeps its right to tax too, which is why the method article of the treaty exists.
Credit or exemption
The Model offers two main ways for the residence state to give relief.
- Exemption with progression: the foreign income is left out of the tax base in your home state, but it is taken into account to decide the rate on your remaining income.
- Credit: the foreign income stays in your home tax base, and the tax paid abroad is deducted from the home tax, normally capped at the part of the home tax that falls on that income.
Which one applies depends on the particular treaty and, for the same country, may differ between income types. Some states have also changed methods across their treaties. For instance, Poland has used the multilateral instrument (MLI) to switch several treaties from exemption to credit, which is covered in our article on foreign rental income for Polish residents.
Hypothetical illustration with round numbers, not a forecast: a resident earns 10,000 of rent abroad and pays 1,000 in tax there. Under credit, if the home tax on that rent would be 1,900, the resident pays about 900 more at home. If the foreign tax was 3,000, the credit is usually limited to 1,900 and the surplus is lost. Under exemption with progression, the 10,000 is not taxed at home, but it may push the rate on other income up.
How to find the treaty
Use the official list of your tax ministry or tax authority: in Germany the Federal Ministry of Finance (bundesfinanzministerium.de) publishes the status of treaties, and in Czechia the Ministry of Finance (mfcr.cz) does. Check four things: whether the treaty is in force, the article on immovable property income, the article on capital gains, and the method article. Also check later protocols and, for some states, whether a treaty has been suspended: the 2026 German treaty-status letter, as reported by tax advisers, mentions the suspension of the treaties with Russia and Belarus. Confirm on the official page before you rely on it.
If there is no treaty, domestic law of your home state decides, and it often still offers a credit for foreign tax up to a limit.
Documents that prove foreign tax paid
Relief at home normally depends on evidence. Typical requests are:
- the foreign tax return or assessment, with a translation if asked;
- the receipt or bank statement showing the payment, with the date;
- the lease agreements and a statement of income and expenses;
- the purchase and sale contracts with dates and costs;
- a certificate of tax residency, which the foreign tax office may require before it applies treaty rates.
Keep originals and translations for as long as your tax office's limitation period runs, and convert amounts using the exchange rate your own tax office prescribes.
FAQ
Do I pay tax twice if I own a flat abroad? Not necessarily. Both countries may have a right to tax, but the treaty or domestic law should give relief in your home state. The relief is often partial and depends on the rate abroad.
Which treaty applies, the one with the country where the property is or with my citizenship country? The treaty between your state of residence and the state where the property is located. Citizenship matters only as a late tie-breaker.
Does the treaty cancel foreign tax? No. It limits it and gives relief at home. You still file and pay in the country where the property is.
What if I am resident in two countries? Apply the tie-breaker rules of the treaty between those two states; they decide which one counts as your residence for treaty purposes. Get advice before filing.
Can I get a refund of tax paid abroad? Only through the claim mechanisms of the foreign country, usually within a deadline. Ask a local adviser.
How we help
We are a trilingual platform that finds properties and coordinates independent local lawyers and tax advisers, so that tax questions are asked before you buy. This text is informational and is not legal, tax or investment advice; treaties and domestic rules change, so verify the current rules with your tax office or adviser. See also the countries we cover and the calculators.