Despite the fact that Germany is famous for generally high taxes, the authorities treat property owners leniently. Annual tax for owners of apartments can be as low as €70-80, the purchase tax starts at 3.5%, the tax on profits from the sale in some cases is not charged. In this article, we will describe each of the German taxes that apply to owners of real estate in Germany, the possibilities to reduce or avoid them altogether, as well as the rules and peculiarities of payment.
Obligations and rights of non-residents who have bought property in Germany
Buying real estate in Germany is the right of a citizen of absolutely any country. There are no restrictions on the type of property: it can be a dwelling, a commercial property, a plot of land in any federal land. But regardless of citizenship and residence, non-resident buyers must pay in most cases the same taxes as residents.
A non-resident German – a person who resides in Germany for less than 183 days per year – pays taxes only on income earned in the country. For example, if you run a business in Germany, whether it’s even renting out a home you bought, you have to pay tax on your income. Exactly the same as the tax on the possession, transfer of an object located in Germany. There are two things to keep in mind.
If you are a citizen/resident of, say, Belarus or Russia, before you buy property in Germany, you must notify your tax office about opening an account in a foreign bank or opening a legal entity.
Between Germany and Russia (and 95 other countries) signed a treaty on avoidance of double taxation. This means that if you pay tax in Germany and have the appropriate documents in hand, you will not have to pay taxes in Russia.
Note that in Germany are very strict with regard to debtors. If there are arrears in payment of taxes, the case may end up a heavy fine, deprivation of a visa or even a residence permit. If the owner has not paid the debt for a long time, the housing can be forcibly sold at auction.
Taxes when purchasing real estate
Regardless of the foreigner’s place of residence, the new owner must pay a transition tax (Grunderwerbsteuer) when purchasing a property. Depending on the region the rate varies between 3.5% and 6.5%.