Is it necessary to notify the FTS of real estate abroad?
This question was asked by an owner of a 4-room flat located in an expensive neighbourhood in Riga. Not long ago, he decided to diversify investments and buy real estate abroad. He chose the capital of Latvia not without reason. The client loves the city and he has always dreamed to have his own dwelling near the historic centre.
As it follows from the current law, the fact of owning real estate abroad does not result in any obligation to notify tax authorities.
In our opinion, it is advisable to declare a flat in Riga in situations, as follows:
- if the flat is a source of income (rented out, for example), and tax on such income is not paid;
- if the flat is planned to be sold;
- if the purchase of the flat was carried out in violation of the foreign exchange law (money was transferred without using authorised banks (taking into account the 2-year Statute of Limitation on liability for administrative offences));
- if, in the creation of sources for the acquisition of real estate, taxes were not paid (taking into account the 3-year Statute of Limitation on liability for tax offences).
As the client bought the flat for a long-term personal use, and no breach was committed in the course of the purchase process, declaration of the real estate was not required.