Owners of rental property in Germany are liable to pay tax regardless of whether or not they are tax resident in Germany. An individual is considered resident in Germany if s/he has their primary residence there or spends over 183 days in the country during a period which may span two tax years.
Advance income tax payments may be required during the course of the tax year (in March, June, September and December). When releasing the assessment notice, the German tax office (Finanzamt) settles both the previous year’s income tax and the advance payments for the current year. The advance payments are generally based on the previous year’s tax liability.
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
This 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.
UK & Irish residents
If you are resident in the UK or Ireland you will have to report any income received in Germany on 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. Your PTI Account Manager can provide advice regarding double taxation relief and/or filing your resident tax return.
The information provided here is intended as a guide only. While Property Tax International 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.