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.
Overview of German Tax Services
At PTI we understand that the German tax system can be confusing especially for those that don’t speak German. We provide a complete income tax filing service aimed specifically at property owners who are resident outside Germany. With a multi-lingual team, PTI caters for investors and lifestyle property owners all over the world. We offer the following services:
- Personal German Income Tax Return
- Partnership Income Tax Returns
- German Capital Gains Tax (CGT) Return
- Assistance with German tax payments
All our German tax filing services are carried out in-house by our team of German tax specialists. We do not out-source any part of the process to a third party ensuring your return is managed at all times by PTI.
Your dedicated tax specialist will be your one point of contact throughout the return process. You will have direct access to the tax specialist preparing your return who will also communicate directly with the German Tax Agency when required.
- As a non-resident in Germany do I need to file a German tax return?
- Yes, when you recieve income from a German source you must submit a German income tax return before the German tax authorities.
- I recieve rental income from my German property, what are my German tax obligations?
- As a non-resident German property owner you are obliged to file a German income tax return. Non-residents are subject to German personal income tax on income derived from their German property.
- Do I need to apply for German personal tax ID number?
- No, you do not have to apply for German tax ID number. It will be assigned automatically once your first German income tax is filed.
- What is the deadline for submitting my German income tax return?
- The German income tax return must be filed by 31 July the year after the income was received. An extension to 31 December applies where a tax adviser prepares the return on your behalf.
- What are the German income tax rates for non-residents?
- German income tax rates range from 14% to 45%.
- What is the additional tax burden I may have?
- You are due to pay an additional solidarity surcharge of 5.5% on the top of your income tax liability. You may also be liable to pay church tax of 8% to 9% on your income tax liability if you are a registered Church member.
- I intend to sell my German property, what are my German capital gains Tax obligations?
- If you make a gain when selling your German property you are liable to pay German Capital Gains Tax. The capital gains tax rate is the same as the German personal income rate. Profits from the sale of private real estate that have been held for more than 10 years are exempt from German capital gains tax.
- As a non-resident owner of a German property, am I due to pay German local taxes?
- Local Property Tax (Die Grundsteuer) is applied on real estate in Germany. It is a communal tax levied by the local authority in each region with rates varying from location to location and based on the type of property.