The National Taxation Bureau of the Southern Area, Ministry of Finance, stated that when an individual files his or her basic income in accordance with the Income Basic Tax Act, losses incurred from overseas property transactions may be deducted only from income derived from overseas property transactions in the same taxable year and shall not be carried forward to subsequent years.

The Bureau explained that, according to Subparagraph 1, Paragraph 1, Article 12 of the said 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, where an overseas property transaction results in a loss, such loss may be deducted from income derived from overseas property transactions in the same taxable year, and the deductible amount shall not exceed the amount of such income.

If there is no income derived from overseas property transactions in the same taxable year, or if the losses exceed the income, the excess losses shall neither be used to offset other categories of overseas income in the same taxable year, such as profit-seeking or interest income, nor be carried forward to subsequent taxable years. In addition, such income and loss are calculated based on the actual transaction price and the original cost in the years in which the loss was incurred, and the deduction claimed is limited to the amount which has been assessed and recognized by the tax collection authority.

For example, Mr. A derived an income of NT$8 million from overseas property transactions from the disposal of overseas securities in 2024, but he failed to calculate and file his basic income under the Income Basic Tax Act. He claimed that he had incurred losses of NT$8.1 million from overseas property transactions in the preceding taxable year 2023 and therefore considered that no taxable income remained after offsetting the losses, consequently failing to file the overseas income.

However, losses incurred from overseas property transactions may be deducted only from income derived from overseas property transactions in the same taxable year and cannot be carried forward to subsequent years. Accordingly, the losses incurred in taxable year 2023 could not be used to offset income derived in taxable year 2024. Consequently, the Bureau adjusted and imposed additional basic income tax of NT$400,000 for taxable year 2024 and a penalty in accordance with the applicable laws and regulations.

The Bureau would like to remind the public that those who dispose of overseas financial products or other overseas property should pay close attention to the relevant regulations of the Income Basic Tax Act. In cases of failure to calculate or file their income in accordance with the applicable regulations, taxpayers should voluntarily file a supplementary tax declaration and make a supplementary payment covering the tax amount and surcharging interest before being reported by an informant or investigated by the tax collection authority in accordance with Article 48-1 of the Tax Collection Act. By doing so, they may be remitted from relevant penalties.

Press Release Contact: Ms. Lee
Legal Affairs Division
TEL: 06-2223111 ext.8132