When Investing in Overseas Financial Products, Remember to Declare Basic Income Amount as Required by Law
When taxpayers file their individual income tax returns, if the total overseas income （including income from sources outside the Republic of China and income from Hong Kong and Macau sources） received by all members of the same tax filing unit reaches NT$1 million for the year, and the individual’s basic income amount exceeds NT$6 million （the annual exemption amount is adjusted and announced according to the consumer price index; the basic income exemption amount for individuals in 2024 is NT$7.5 million）, they should declare and pay the basic tax amount in accordance with Paragraph 1, Article 12 of the Income Basic Tax Act and Article 14 of the Enforcement Rules of the Income Basic Tax Act.
The National Taxation Bureau of Kaohsiung, Ministry of Finance explains that overseas income is not within the scope of income information that can be queried by tax authorities. If individuals purchase offshore funds through domestic financial institutions, and the fund is registered overseas, the fund’s distributions and the gains or losses generated from selling or redeeming the fund are considered overseas income. Taxpayers should declare the basic income amount and calculate the basic tax amount as required by law. If financial institutions do not proactively notify investors of their realized overseas income, investors should actively inquire with them about the details of their overseas transaction income for the year, confirm the income category and amount, and truthfully declare their basic income amount to avoid additional taxes and penalties for tax evasion.
The Bureau has compiled common mistakes and key points for declaring overseas income, reminding taxpayers to avoid additional taxes and penalties due to lack of understanding of regulations or misconceptions:
1. Mistakenly believing that overseas income is within the scope of income information provided by tax authorities: Overseas income is not within the scope of income information that can be queried by tax authorities. Therefore, the tax calculation notice provided by tax authorities will not include overseas income data. When taxpayers query their income for the tax year during the individual income tax filing period, they will not be able to obtain overseas income information from tax authorities.
2. Mistakenly believing that losses from overseas property transactions can be offset against different categories of overseas income, or can be carried forward to offset income in future years: Losses from overseas property transactions cannot be offset against overseas interest income or profit-seeking income. Losses from overseas property transactions can only be deducted from overseas property transaction income in the same year. If there is no transaction income for deduction in that year, or if there is insufficient deduction, it cannot be carried forward to offset income in future years.
3. Mistakenly believing that there are no tax issues with overseas fund switching because no cash is remitted: After switching overseas funds, there is an expression of intent to redeem the original fund and reinvest the redemption amount to purchase a new fund. Therefore, the gain or loss on the original fund should be calculated and included in taxable income in the year of the fund switch.
4. Mistakenly believing that dividends distributed by foreign companies listed on Taiwan’s stock exchange (or OTC market) are domestic income: Foreign companies currently approved to be listed on Taiwan’s stock exchange（or OTC market） are commonly known as KY stocks. Dividends received by individuals from KY stocks are overseas income and are not within the scope of income information that can be queried by tax authorities. If the total overseas income per tax filing unit reaches NT$1 million for the year, taxpayers should declare the full amount in their basic income based on the dividend details provided by the investment unit.
The Bureau reminds taxpayers that, as investing in overseas financial products has become popular in recent years, please remember to declare the basic income amount as required by law to avoid penalties. If you find that you have not declared it as required by law, before being reported or investigated by tax authorities, please promptly make a supplementary filing and pay the tax plus interest at your local taxation branch or tax collection office. You may be eligible for exemption from penalties under relevant regulations. If you have any questions, you can call the toll-free service hotline at 0800-000-321, or visit the Bureau’s website （https://www.ntbk.gov.tw）to make inquiries online using the National Tax Smart Assistant “National Tax Helper”
Provided by: Legal Affairs Division
Contact Person： Section Chief Ms.Hsu. Contact Phone：（07）7256600 ext. 7550
Written by：Huang Yue-Chiao Contact Phone：（07）7256600 ext. 7553
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=a92be5e40c10406d9ce73a4059bf265c