Residence in the UK, rental in Germany.
August 21, 2013 | 30,00 EUR | answered by Dr. Yanqiong Bolik
Hello,
I am a resident in the UK and I would like to rent out a property in Germany. I would like to know approximately how high my tax burden from the rental income will be. In the UK, I earn income from employment which is regularly taxed in the UK (PAYE). I recently inherited the property in Germany with my sister, meaning we are co-owners of the property as heirs and my share is 50%.
Example calculation (monthly):
Income in Germany:
Rental income of the inheritance community = €1000
Losses from renting out (loan interest, management, repairs, etc.) = €100
No more depreciation, as inherited (no own acquisition costs) and building year 1950
Income in the UK:
Salary = €5000
Withheld Income Tax (PAYE) = €900
no other income
I know that according to the Double Taxation Agreement with the UK, the rental income from the property in Germany must be taxed. Now I would like to know how high my tax burden in Germany will be in this specific case.
Kind regards
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into account your effort and the rules of this platform.
Please note that my response is based on the information provided, and that adding, omitting, altering the details or the ambiguity of the information can change the tax result. Please be aware that this does not replace individual comprehensive advice.
If you do not have a residence within the meaning of §8 AO or a habitual abode within the meaning of §9 AO in Germany, you are only subject to limited tax liability in Germany with your German domestic income.
Income from rental and leasing is considered German domestic income within the meaning of §49 para. 1 no. 6 in conjunction with § 21 EStG.
Based on your information, the joint income will be 1,000 EUR and expenses 100 EUR. Consequently, the surplus for the year is (1000 - 100) * 12 = 10,800 EUR. You are entitled to 50% of this surplus, which is 5,400 EUR. Under current legislation, the income tax for limited tax liability amounts to 1,028.00 EUR and the solidarity surcharge is 11.20 EUR.
I hope I could assist you.
If you have any further questions, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: steuer@zdbz.de
www.steuerberatung.dr-bolik.de
