Transient Occupancy Tax - Foreign Tax Credit

Transient Occupancy Tax - Foreign Tax Credit

Didn't find your answer?

Is Transient Occupancy Tax paid on Foreign Rental income considered to be an expense deduction or allowable for Foreign Tax Credit if the countries Double Taxation Agreement allows a deduction for 'Foreign Tax' Paid?

I have done some research and unfortunately cannot find a difinitive answer on this topic. 

Any assistance would be greatly appreciated! 

Replies (7)

Please login or register to join the discussion.

avatar
By Wanderer
08th Sep 2023 11:02

DTA's generally list the taxes to which they apply, look fairly early on, in the DTA, normally Article 2.

Thanks (1)
Replying to Wanderer:
avatar
By AccountingQs K
08th Sep 2023 13:18

Thanks Wanderer, this is very helpful

Thanks (0)
avatar
By David Ex
08th Sep 2023 11:38

In the absence of any details about the tax jurisdictions involved, I did a Google search which suggests this is a tourist tax levied on people renting rooms and staying at hotels, etc..

Thanks (1)
Replying to David Ex:
avatar
By Hugo Fair
08th Sep 2023 12:50

"Transient Occupancy Tax paid on Foreign Rental income" seems to say differently - although my understanding coincides with yours.

So, OP, which jurisdiction? And what is exact name/nature of the tax deducted?
[With those answers, you can then follow Wanderer's excellent suggestion.]

Thanks (1)
Replying to David Ex:
avatar
By AccountingQs K
08th Sep 2023 13:20

Thank you, my confusion was due to the fact that the management companies pay this. This is levied due to short-term guests. I would consider this as an expense if income is charged to the customer and paid on to the authorities. But no Double Taxation Relief.

Thanks (1)
avatar
By David Treitel
12th Sep 2023 09:46

The question relates to a property located in the United States. Assuming the client has elected to claim expenses in the US, transient occupancy tax (along with real estate tax, and City Business Tax - which is often overlooked) are deductible for income tax purposes as an expense in both the US and the UK.

Thanks (1)
Replying to David Treitel:
avatar
By AccountingQs K
12th Sep 2023 13:15

Thanks David, this is helpful!

Thanks (0)