Sale of the shared properties in Russia according to the new definition of the shares
February 18, 2015 | 25,00 EUR | answered by Anton Pernitschka
Dear Sir or Madam,
My wife, my children (28 and 38 years old) and I live in Germany and have owned an apartment in Russia for more than 10 years. The ownership is shared, but with defined parts: 2 parts belong to my wife and 1 part each to the other owners. Now the children are gifting their 2 parts to me, so that I will have 3 parts and my wife will still have 2 parts. Such a gift is tax-free in Russia (relatives children-parents). Also, tax preferences apply for long-term owners (in Russia, it counts if the property has been owned for more than 3 years) in case of a sale. It is considered a distribution of parts, not a new ownership of the gifted parts.
How does this situation look in German tax law? Do we have to pay taxes in Germany in case of a sale? If so, then we can, in my opinion, choose where to pay taxes - in Russia or in Germany - based on the Double Taxation Agreement. How is the tax calculated in Germany in this case? Does it depend on our income?
Thank you for your help.
Best regards,
[Your Name]
Dear questioner,
In the context of an initial consultation and your fee commitment, in accordance with the regulations of this forum, I would like to answer your question.
According to § 23 paragraph 1 sentence 1 No. 1 EStG, a private sales transaction occurs when a property is sold within 10 years of its acquisition. Therefore, there is no income tax obligation if the period between acquisition and sale exceeds 10 years. In the case of gratuitous acquisition, the acquisition of the asset by the legal predecessor is attributed to the individual legal successor for the purposes of this provision.
If you intend to sell your apartment, the period between acquisition and sale according to the facts is more than 10 years, as the acquisition date of your children is attributed to you. Therefore, income tax in Germany is not applicable.
According to § 30 ErbStG, there is generally an obligation to notify the German tax office of the gift. The decisive factor in this case is the market value of the property. According to § 21 paragraph 3 ErbStG, proof of the value must be provided with suitable documents.
The answer was given based on your description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Best regards,
Anton Pernitschka
Tax Consultant
