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German Property Tax Information

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Owners of rental property in Germany are liable to pay taxes in Germany regardless of whether or not they are tax resident in Germany. An Individual is considered resident in Germany if she/he has their primary residence there or spends over 183 days in the country during a period which may fall into two tax years.

The tax year in Germany is the calendar year.

 

German Income Tax rates vary from 14% - 45%. A solidarity surcharge of 5.5 % on the income tax liability is also charged. In addition, if an individual is a registered church member he/she might be charged additional 8% to 9% on the top of his income tax liability.

 

Advance income tax payments might be required during the course of the tax year (in March, June, September and December). When releasing the assessment notice the Tax Office (Finanzamt) settles both the previous year’s income tax and the advance payments for the current year.  The advance payments are based in general on the previous year’s tax liability.

 

The annual German income tax return must be filed by 31 May. An extended deadline to 31 December applies where a return is filed by a tax adviser.

 

If two or more non-married persons own a German property a Partnership must be established and partnership returns are required. Married persons may be taxed jointly or separately but non-residents are not allowed to file joint income tax returns.

 

Local German Property tax is a communal tax imposed by the local authority. The tax is calculated using a value which is generally lower than the purchase price. The tax rate applied to this value may range from 2.6% to 10% depending on the type and location of the property.

 

German Capital Gains Tax (CGT) rate is the same as the personal income tax rate. Profits arising from the sale of private real estate that has been held for more than 10 years are exempt from capital gains tax.

 

Worldwide income 

If you are resident in the UK or Ireland you will have to report any income received in Germany in your annual resident tax return (i.e. your Irish or UK tax return). There are double taxation agreements between Germany and Ireland and Germany and the UK so relief from double taxation is usually available. Please contact us for further details regarding double taxation relief and/or filing your Resident Tax Return. 

 

Property Tax International can organise the following services for you:

 

  • Prepare and File your German Tax Return in respect of your German Rental Income
  • Prepare and File your CGT (Capital Gains Tax) Tax Return
  • Assist you in arranging payments to the German Tax Office

 

The information provided here is intended as a guide only. While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.

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Property Tax International is a trading name of Taxback Returns which is part of the Taxback Group incorporating taxback.com providing financial services since 1996