Tax hurdles, rupee fears: NRIs in Europe divided on whether investing in India is still worth it

A recent post on Reddit has triggered a lively debate among Non-Resident Indians (NRIs) in Europe over how best to invest in India while living abroad.

The original post by an NRI based in the Netherlands, shared that while they had been investing largely in Indian mutual funds, they were now exploring direct stocks and alternative options. The user outlined challenges around conversion charges, INR depreciation, taxation, and the limited benefits of the India–Netherlands Double Taxation Avoidance Agreement (DTAA), which does not extend relief on capital gains.

Explaining the Dutch system, the post highlighted that savings and investments are taxed under Box 3 wealth tax, where a “notional return” is assumed by the tax office regardless of actual gains or losses. For 2025, this assumed return is 0.92% on savings and 6.04% on investments, taxed at 32% after a tax-free allowance of €57,000 per person.

The post drew varied responses from fellow NRIs.

One user cautioned against locking too much capital in India. "Leave the Indian corpus invested in India. But India makes moving money out very difficult, so minimize further investments. I prefer a mix of EU pension funds and US equities, which also helps diversify currency exposure," replied the user.

Another highlighted the complexities of using DTAA for Indian mutual funds in Europe: "Indian MFs can be beneficial in countries like Switzerland or Belgium due to DTAA advantages, but it’s not always straightforward. Local tax authorities often scrutinize claims, and you may end up needing appeals or legal support."

Others pointed to macro risks: "You’ll lose 5% to rupee depreciation and 10% to inflation when investing in India. Unless returns are 25% or higher, it may not be worth it. Euro-denominated ETFs are safer in the long run."