If you are taxed in Germany
Under the 2011 treaty Spain taxes the property first, and Germany taxes the same income again with a credit for the Spanish tax. In practice you pay at the higher of the two levels.
Credit, not exemption
Under the German–Spanish treaty of 2011, income from immovable property may be taxed in Spain, where the property is. Unlike most German treaties, it does not exempt that income in Germany: rental profit, and a sale gain inside the ten-year period, are declared in Germany too, and the Spanish tax is credited against the German tax on the same income, up to that amount.
What you actually declare
While you own it
- No German property tax on the Spanish house itself.
- Spanish imputed income tax and IBI are paid in Spain and stay there.
- German inheritance and gift tax covers the Spanish house if you or your heir live in Germany; there is no treaty, but Spanish inheritance tax is credited.
- Ownership through a Spanish S.L. needs advice before you structure: the German CFC rules only reach passive income taxed below 15 %, but private use of a company-owned house can be a hidden profit distribution (vGA).
If you rent it out
- Rental profit is taxed in Spain at 19 % with costs deductible, as an EU resident.
- Germany taxes the rent too, computed under German rules (Anlage V, with depreciation), and credits the Spanish tax via Anlage AUS; church tax and the solidarity surcharge apply to what remains.
- German depreciation rules do not apply to the Spanish computation — two sets of books, one property.
When you sell
- The gain is taxed in Spain at 19 %.
- Sell within ten years of buying and the gain is taxable in Germany as a private sale, with the Spanish tax credited; after ten years, or if you only used the house yourself, Germany does not tax it.
- Keep the Spanish sale papers: the credit needs proof of the 19 % paid, including the 3 % the buyer withheld.
Five questions for your own adviser
How much of the Spanish tax can I actually credit against my German tax?
Do I hold this personally, jointly, or through a company — and what happens if I use a company-owned house myself?
Which German forms carry a Spanish property and its income?
How are the Spanish and German depreciation and cost rules reconciled?
Does my German inheritance planning work with a Spanish asset in it?
