Spain taxes the house. Your country taxes you.

Is there a tax treaty between Germany and Spain, and how does it work for a holiday home?

Yes. The treaty of 3 February 2011 has applied since 2013. Spain taxes the property first; Germany then also taxes rental income and sale gains from it, but credits the Spanish tax. Spain is an exception here: for property in most other countries Germany exempts the income, for Spain it uses the credit method (Art. 22(2)(b) of the treaty). If you only use the house yourself, there is no income, so nothing to tax in Germany, and Germany has no wealth tax and no property tax on a house abroad.

What does buying cost on top of the price?

On a resale home in the Balearics you pay transfer tax (ITP) on a marginal scale: 8 % up to €400,000, 9 % to €600,000, 10 % to €1 million, 12 % to €2 million and 13 % above. A €1,000,000 purchase costs €90,000 in ITP — 9 % on average. Add notary, land registry and your own lawyer, typically 1–2 % together. A new home bought from the developer carries 10 % IVA plus stamp duty (AJD) instead of ITP.

Do I need my own lawyer when there is a notary?

Yes. The Spanish notary certifies the deed and checks identities and payments, but does not act for you. Your own independent lawyer checks title and charges in the land registry (nota simple), building licences, the habitation certificate, a tourist licence if one is claimed, and unpaid taxes or community fees that would pass to you. Never use the seller's or the agent's lawyer.

How does buying work, step by step, and how long does it take?

You get a Spanish tax number (NIE) and a Spanish bank account, your own lawyer checks the property, and you sign a private reservation or deposit contract (arras), usually with 10 % down. The deed is signed before a notary, you pay the balance there, and the lawyer registers the deed and files the taxes. Six to twelve weeks from accepted offer to keys is normal; the NIE appointment is often the slowest step, so start it early.

Should I buy privately or through a GmbH?

For a home you use yourself, privately is usually the better choice. Privately held, the gain is tax-free in Germany after ten years, or earlier if you only used it yourself. In a GmbH, every gain is taxable, profits are taxed again when paid out, and if you or your family use the house without paying a rent that covers costs plus a profit mark-up, the tax office treats the difference as a hidden profit distribution (verdeckte Gewinnausschüttung). A company makes sense mainly for a property that is let commercially — have that checked before you sign.

Confirm this point with your own adviser.

What do I pay in Spain if I only use the house myself?

Three things. Local IBI and waste charges to the town hall. Non-resident income tax on an imputed income — 1.1 % or 2 % of the cadastral value, taxed at 19 % for EU residents, filed once a year on Modelo 210. And Spanish wealth tax only if your net Spanish assets exceed €3,000,000 per person under the Balearic rules, which you may apply as a non-resident; above that the state solidarity tax also applies, with Balearic wealth tax deducted from it.

Do I pay anything in Germany on a house I only use myself?

No. Own use produces no income, so there is no German income tax, and Germany has neither a wealth tax nor property tax on a home abroad. The flip side: the Spanish imputed-income tax cannot be credited in Germany, because there is no German tax to set it against, and a directly owned house triggers no German reporting duty. That changes as soon as you let it or sell it within ten years.

Who files what, and when?

In Spain, Modelo 210 for the imputed income: for 2025 by 31 December 2026; from the 2026 tax year the window is 1 April to 31 December of the following year. IBI is paid when the town hall bills it. In Germany nothing is due for pure own use. A Spanish fiscal representative or gestor typically files for you; keep the receipts, because you will need them for a later sale.

May family and friends use the house?

Yes. Free use by you, your family and friends is not letting and needs no licence; the Spanish imputed-income tax is due either way. Once anyone pays, it is letting: stays under a month need a tourist licence (ETV), while stays of a month or more can be let on a written seasonal lease, and the rental income must be declared in Spain and in Germany.

How is rental income taxed in Spain?

As an EU resident you pay 19 % on the net income — rent minus deductible costs for the let days. Non-EU owners pay 24 %. Rental income is declared on Modelo 210; from the 2026 tax year the annual return is due 1–20 April of the following year. On €100,000 of rent with €30,000 of costs, the Spanish tax is €13,300.

Do I also pay tax in Germany on the rent?

Yes — Spain is the exception to the usual German exemption. You declare the rental profit in your German return (Anlage V, for holiday lets also Anlage V-FeWo), calculated under German rules, and claim the Spanish tax as a credit in Anlage AUS. The credit is capped at the German tax on that income, so at a German rate of 42 % you pay most of the difference above Spain's 19 % in Germany; church tax and, above its threshold, the solidarity surcharge are levied on the German tax that remains. Keep the Spanish returns and payment receipts as proof.

Confirm this point with your own adviser.

Can I deduct a rental loss in Germany?

In principle yes. Because Germany taxes the Spanish rent rather than exempting it, a loss calculated under German rules reduces your other German income; the old restriction on foreign losses now only applies to non-EU countries. The catch is the profit-intention test: for a holiday home you also use yourself, the tax office expects a forecast showing a surplus over 30 years, and without one the loss is disregarded. A home let exclusively to guests at normal local occupancy is in a much stronger position.

Confirm this point with your own adviser.

Can I let it to holidaymakers?

Only with a holiday rental licence (ETV), and new licences in Mallorca are scarce. Without one, you can let for a month or more under a written seasonal contract, which is legal and taxed the same way. A licence is attached to the property, so check it before you buy, not after. Letting also matters for a later sale: within ten years of purchase it can cost you the German own-use exemption.

How is a share in a Homebase home taxed for someone living in Germany?

It depends on the structure, and we state it for every home. If the share is a slice of the deed, you own property: Spanish imputed-income tax and IBI on your share, nothing in Germany for own use, and German tax with Spanish credit on any rental income; several German co-owners letting together may need a joint German determination of the income. If the share is part of a Spanish S.L., you own company shares: the S.L. pays Spanish corporate tax, and dividends and gains are taxed in Germany as capital income, with Spanish tax credited.

Confirm this point with your own adviser.

Is an S.L. share a problem for German residents?

It can be, and mainly because of use. If shareholders stay in the company's home without paying a rent that covers its costs plus a profit mark-up, the German tax office can treat the benefit as a hidden profit distribution and tax it as dividend income. The anti-avoidance rules on foreign companies normally don't bite, because Spanish corporate tax (25 %) is above the 15 % threshold. A holding of 10 % or more, or costing over €150,000, must be reported to the German tax office with your return. Have the usage terms checked by a German adviser before you sign.

Confirm this point with your own adviser.

What happens when I sell my share?

With a deed share, the buyer pays transfer tax again (8–13 %), you pay 19 % Spanish gains tax and plusvalía, and Germany taxes the gain only if you sell within ten years. With an S.L. share, a transfer that doesn't give the buyer control normally carries no transfer tax, but Spain still taxes your gain at 19 %. In Germany a holding of 1 % or more is taxed under § 17 EStG — 60 % of the gain at your personal rate, regardless of how long you held it — with the Spanish tax credited; below 1 % the 25 % flat tax applies.

Confirm this point with your own adviser.

What do I pay in Spain when I sell?

19 % on the gain as an EU resident, plus the municipal plusvalía on the land value. The buyer withholds 3 % of the price and pays it to the Spanish tax office (Modelo 211). That 3 % is an advance: you file Modelo 210 within four months of the sale and reclaim the difference if the actual tax is lower.

Is the gain taxed in Germany?

Only if you sell within ten years of buying; after that it is tax-free in Germany. Within ten years it is a private sale under § 23 EStG, taxed at your personal rate with the Spanish tax credited — unless you used the home only yourself, or in the year of sale and the two years before. The Federal Fiscal Court confirmed in 2017 that a holiday home counts as own use as long as it is not let. For an inherited or gifted home, the ten years run from the original purchase.

Confirm this point with your own adviser.

What is plusvalía, and who pays it?

Plusvalía is the municipal tax on the increase in the land value while you owned the house. On a sale the seller pays it. Since 2021 you can choose between the town hall's coefficient method and the real gain, and if you sell without a gain no plusvalía is due — keep your purchase deed and costs to prove it.

What documents should I have ready?

The deed (escritura), the latest IBI receipt, the energy certificate, the habitation certificate where required, the licence if it is let to holidaymakers, and the paperwork behind your purchase price and improvements — they reduce the taxable gain in Spain and, within ten years, in Germany. A prepared file is also what makes a buyer move.

What does Spain charge if my children inherit the house?

Spain taxes the inheritance of Spanish property, and non-resident heirs apply the Balearic rules. Spouses, children, grandchildren and parents get a 100 % reduction of Balearic inheritance tax; since 25 July 2025 this also applies to heirs who live outside Spain. The return is due within six months. The heirs also pay the municipal plusvalía on the land value — the so-called plusvalía del muerto — plus notary and registry.

Confirm this point with your own adviser.

And in Germany?

German inheritance tax applies to the worldwide estate if the deceased or the heir lives in Germany, so the Mallorca house is included, at market value. Children have an allowance of €400,000 per parent, spouses €500,000, grandchildren €200,000; above that rates in class I run from 7 % to 30 %. There is no inheritance tax treaty with Spain, but Spanish inheritance tax paid on the house is credited (§ 21 ErbStG) — with the Balearic 100 % reduction there is often little to credit. The tax-free family home rule does not cover a holiday home.

Confirm this point with your own adviser.

Can I give the house to my children while I'm alive?

Yes, but look at both countries. In Spain, gifts to children and spouses get a 100 % Balearic deduction since 25 July 2025, if made by public deed with the value within the legal limit; but Spain treats the gift as a disposal by you, so you pay 19 % Spanish tax on the increase in value, and the child pays the plusvalía. In Germany the gift is subject to gift tax with the same allowances as inheritance — €400,000 per parent per child — renewed every ten years, with Spanish gift tax credited. The Spanish gains tax is a real cost, because Germany has no income to set it against.

Confirm this point with your own adviser.

Which law applies to my estate, and do I need a Spanish will?

Under the EU Succession Regulation your whole estate, including the Mallorca house, follows the law of the country where you habitually live — German law while you live in Germany — unless your will chooses the law of your nationality. A German will is valid in Spain, but it must be translated and the heirs need a German certificate of inheritance or a European Certificate of Succession. A separate Spanish will for the Spanish property, aligned with your German one, makes the notary process in Spain much faster.

When do I become tax resident in Spain, and when do I stop being taxable in Germany?

Spain treats you as resident if you spend more than 183 days a year there, if your main economic interests are there, or if your spouse and minor children live there; Spain then taxes your worldwide income. Germany keeps taxing your worldwide income as long as you have a home available to you in Germany, even one you rarely use. If both countries claim you, the treaty decides by permanent home and centre of vital interests. Plan the move and give up or let the German home, rather than drifting into dual residence.

What happens to my German pension when I move?

Spain taxes it as a resident's income and credits any German tax. For the statutory pension, Germany keeps a limited right: up to 5 % of the gross pension if it started between 2015 and 2029, up to 10 % if it starts from 2030, collected via the Finanzamt Neubrandenburg; pensions that started before 2015 are taxed only in Spain. Civil-service pensions (Beamtenpensionen) stay taxable in Germany. Occupational and Riester pensions are generally taxed in Spain, but those built on more than twelve years of German tax support fall under the same 5 %/10 % rule.

Confirm this point with your own adviser.

Is there an exit tax when I leave Germany?

Yes, if you have held 1 % or more in a company — a GmbH, foreign shares, or an S.L. — at any time in the last five years, and were taxable in Germany for at least seven of the last twelve years. Germany then taxes the unrealised gain on those shares as if you had sold them (§ 6 AStG), even when moving within the EU. On request the tax can be paid in seven annual instalments, and it lapses if you return within seven years. Courts have questioned whether the instalment rule is compatible with EU law, so get advice before you move, not after.

Confirm this point with your own adviser.

Can I use Spain's 'Beckham' regime?

Only if you move to work. It applies if you were not Spanish resident in the previous five years and move for a Spanish job, remote work for a foreign employer, a director's role or a qualifying entrepreneurial activity. Employment income is then taxed at a flat 24 % up to €600,000 for the year of arrival plus five years, and most foreign income is not taxed in Spain. Retirees and people living off investments cannot use it. You must apply on Modelo 149 within six months of registering with Spanish social security, and German advisers should check whether it counts as preferential taxation under § 2 AStG for German citizens.

Confirm this point with your own adviser.

Do I have to report my German assets to Spain?

Yes. As a Spanish resident you file Modelo 720 for foreign assets above €50,000 per category — accounts, securities and insurance, property — by 31 March of the following year. The heavy penalties were struck down by the EU Court in 2022, but the filing obligation remains. As a Balearic resident you also pay wealth tax on worldwide assets above €3,000,000, plus €300,000 for your main home.

Does German inheritance tax still apply after I move?

For five years, yes, if you are a German citizen: Germany keeps taxing gifts and estates worldwide during that period (§ 2 ErbStG). After that it still applies whenever the heir or recipient lives in Germany — so children living in Germany are taxed there on everything they inherit from you. Spain then taxes too, as you are resident there; with the Balearic 100 % reduction for close family the Spanish side is usually small, and Spanish tax on foreign assets can be credited in Germany.

Confirm this point with your own adviser.