Taxes: deposit interest vs rent vs capital gain in the EU

Savings and property are taxed differently, and the difference can change the ranking. Deposit interest is usually taxed at a flat rate, often at source. Rent is taxed as income, sometimes at a lower special rate. A gain on sale may be tax-free after a holding period. For a resident who owns property in another country, two countries may claim a share, and a treaty decides how the double tax is relieved. This article gives the main rules for residents of Poland, Germany, Czechia and the Baltic states as we could verify them in October 2026. Rates change, so treat this as a starting point.

Interest on deposits

• Poland: 19% on interest, normally withheld by the bank. See the Ministry of Finance portal podatki.gov.pl for the current rules.
• Germany: a flat withholding tax (Abgeltungsteuer) of 25%, plus a 5.5% solidarity surcharge on it, which makes 26.375% before church tax. The first EUR 1,000 of capital income per person a year (EUR 2,000 for a jointly assessed couple) is covered by the saver's allowance. The figures come from bank and finance portals, so confirm them with the tax office.
• Czechia: interest on bank accounts is generally subject to a 15% withholding tax, which for residents is usually final. We could not open the Financial Administration pages, so check them.
• Estonia: 22% flat income tax rate in 2026, according to the March 2026 EY Baltic tax card. Interest is either withheld by the bank or declared in the annual return.
• Latvia and Lithuania: capital income is taxed at its own rates. For Latvia the State Revenue Service states a rate of 25.5% on capital gains income from 2025 (previously 20%). For Lithuania the tax inspectorate (VMI) describes 15% on property sale income and on some capital income, but the structure changed on 1 January 2026. Check the interest rate with VID or VMI before you rely on a number.

Rental income

• Poland: private rental income is taxed by lump sum, 8.5% up to PLN 100,000 of annual rent and 12.5% above, with no deduction of costs, according to the Ministry of Finance. That applies to your worldwide rent when you are Polish tax resident, and the foreign tax is dealt with under the treaty, as below. See tax on foreign rental income for Polish residents.
• Germany: rent is generally taxed as part of your income at the progressive personal rate, after deducting costs such as interest, depreciation and repairs. We did not re-verify the detail, so check it. For foreign property, see foreign property tax return for German residents.
• Czechia: rent is generally taxed at 15% (and 23% above a high-income threshold) after either a flat-rate or an actual-cost deduction, according to secondary sources. See foreign property tax return for Czech residents.
• Estonia: 22%. If you declare the rent yourself, 20% is deducted for expenses on residential leases, according to secondary summaries of the Tax and Customs Board rules. See Estonia.
• Latvia and Lithuania: separate rules, see Latvia and Lithuania. We could not confirm the current 2026 rates for rent in these countries.

Compare the headline yield only after tax and costs. Our rental income abroad tax guide by country shows what the country of the property takes first.

Capital gains on sale

• Poland: 19% on a gain from selling property before the end of the fifth calendar year after the year in which it was bought, reported on PIT-39. After that period a domestic sale is not subject to this tax. The gain is exempt if the proceeds go to your own housing needs within the set period. This is the domestic rule. For property abroad the treaty and the other country's tax decide how it works in practice. See selling a flat in Poland and PIT-39.
• Germany: private sales are generally taxable if made within ten years, with exceptions, and tax-free afterwards. Check the current rule and the exceptions for own use with the tax office.
• Czechia: income from selling a property is exempt after a time test, which was extended to ten years for properties acquired from 2021. There are shorter tests for a main home. We rely on secondary sources, so verify.
• Estonia: the sale of your place of residence is exempt, usable once per two years, according to the Tax and Customs Board. Other property gains are taxed at 22%.
• Latvia: no income tax on the sale of real estate owned for more than 60 months, according to the State Revenue Service. Shorter ownership is taxed as capital gain.
• Lithuania: sale income is exempt when the property was acquired more than 10 years before the sale and is otherwise taxed at 15% on the gain, according to the tax inspectorate. Check the 2026 changes.

If you sell property in the country where it stands, that country may tax non-residents too. See taxes when selling property abroad by country.

Foreign rental income and treaty relief

A treaty normally gives the country where the property stands the first right to tax rent from it. The country where you live then relieves the double tax by one of two methods. Under the credit method it taxes the income but credits the foreign tax, up to the home tax on that income. Under the exemption method it exempts the income, sometimes taking it into account to set the rate on your other income (exemption with progression). Which one applies depends on the treaty, and some treaties changed after the multilateral convention. Our double taxation treaties guide explains the principle, and the pages above give the details for your residence country. You normally have to declare the foreign income, even where it is exempt.

A hypothetical after-tax comparison

This is an illustration with round numbers, assumptions and no forecast.

A Polish resident compares PLN 200,000 in two places.

• Deposit at 4% a year: interest PLN 8,000, Polish tax 19% is PLN 1,520, net PLN 6,480, or 3.24% of the capital.
• Property abroad bought for PLN 200,000 with a gross rent of 6%, so PLN 12,000. Assume running costs of PLN 3,000 and a foreign tax of 10% of rent, PLN 1,200 (an assumption, not a real rate). Polish lump-sum tax on the rent would be 8.5% of PLN 12,000, or PLN 1,020. Under the credit method the foreign PLN 1,200 covers the Polish PLN 1,020, so no further Polish tax arises in this illustration. Under the exemption method Poland collects nothing on this income. Net rent is PLN 12,000 minus 3,000 minus 1,200, or PLN 7,800, which is 3.9% of the capital.

Here the property pays slightly more after tax than the deposit, but a vacancy of two months would cut the rent by about PLN 2,000 and put it below the deposit. The tax treatment is not the main driver. Costs and vacancy are.

A different residence changes the deposit side. On EUR 100,000 at 3%, a German resident pays 25% plus 5.5% on EUR 2,000 above the allowance, which is EUR 527.50, leaving EUR 2,472.50 (2.47%) before church tax. A Czech resident with 15% withholding keeps EUR 2,550 (2.55%). An Estonian resident at 22% keeps EUR 2,340 (2.34%).

When a deposit is the better choice

A deposit is simple to tax: the bank often withholds, there is one country and no foreign return. If you do not want two tax filings, if a property's net yield after tax is not clearly above the deposit, if you plan to hold for a short time or if the country of the property taxes sales heavily, the deposit may leave you better off after tax.

FAQ

Is rent from abroad taxed twice? It can be taxed in both countries, but a treaty usually gives relief. The method (credit or exemption) depends on the treaty and your residence country.

Do I have to declare foreign rent even if it is exempt at home? Usually yes. Exemption methods often still require a declaration.

Is a sale of property tax-free after some years? In several countries, yes (Poland five calendar years, Germany ten, Czechia ten, Latvia 60 months, Lithuania ten). Conditions and exceptions apply, and the country of the property may tax a non-resident anyway.

How we help

We are a trilingual platform that finds properties and coordinates independent local lawyers and tax advisers. This text is informational and is not legal, tax or investment advice. The example is hypothetical, past performance does not guarantee future results, and rules change, so verify the current rules with your tax authority or adviser.