Taiwan’s tax authority clarified that losses from overseas property transactions could be deducted only against income from similar transactions in the same taxable year and could not be carried forward. The clarification followed a case in which a taxpayer faced TWD 400,000 in additional basic income tax and a penalty after offsetting losses from 2023 against income in 2024.
Taiwan’s National Taxation Bureau of the Southern Area, Ministry of Finance, has clarified that losses from overseas property transactions may be deducted only against income from overseas property transactions in the same taxable year under the Income Basic Tax Act. Unused losses cannot be offset against other categories of overseas income or carried forward to subsequent taxable years.
Under Subparagraph 1, Paragraph 1, Article 12 of the Income Basic Tax Act and Point 16 of the Directions for the Filing and Investigation of Income Derived from Sources outside the ROC and from Sources in Hong Kong and Macau to be Included in the Amount of Individual Basic Income, deductible losses must relate to the same taxable year and cannot exceed the corresponding overseas property transaction income.
Income and losses are calculated using the actual transaction price and original cost, with deductions restricted to amounts assessed and recognised by the tax collection authority.
The Bureau cited a case in which losses incurred in taxable year 2023 were used to offset income in 2024. The tax collection authority disallowed the deduction, assessed additional basic income tax of TWD 400,000 for 2024 and imposed a penalty under the applicable laws and regulations.
Taxpayers disposing of overseas financial products or other overseas property should comply with the relevant filing requirements. Under Article 48-1 of the Tax Collection Act, taxpayers who voluntarily submit a supplementary tax declaration and pay the additional tax and surcharging interest before being reported or investigated by the tax collection authority may be remitted from relevant penalties.
