UK rental income on German tax returns

39 posts in this topic

8 minutes ago, NiedersachsenLady said:

As posted on a similar thread about rental income from Ireland, this link (on page 11) -

https://www.tk.de/centaurus/servlet/contentblob/589226/Datei/1717/TK-brochure-welcome-to-germany.pdf

confirms that health insurance contributions from rental are not taken into consideration for health insurance.

 

Wow, interesting.

But is it really correct? For example, on page 11 it says 

Contributions are always based on the amount of gross salary from employment. Other sources of income (renting, leasing or capital gains) are never taken into account

 

What if a person joins TK while employed, then stays a TK member when turning self employed, his salary (but not his income) will be zero, how to calculate his contribution...?

Or if one has ONLY rental income? Or if one has ZERO income?

 

I thought it was the income (whether DE or global), so to read that only the salary counts I find it strange...

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17 minutes ago, Gambatte said:

 

Wow, interesting.

But is it really correct?

 

It is correct – as long as it is about employed persons. ;) This leaflet is only about "Versicherung der Arbeitnehmer".

 

17 minutes ago, Gambatte said:

 

What if a person joins TK while employed, then stays a TK member when turning self employed, his salary (but not his income) will be zero, how to calculate his contribution...?

 

Based on his income. 

 

17 minutes ago, Gambatte said:

Or if one has ONLY rental income?

 

dito.

 

17 minutes ago, Gambatte said:

 

Or if one has ZERO income?

 

If one has zero income he/she has to pay the minimum contribution.

 

 

 

 

 

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I'm in the same position. Employed in Germany, for which I'm taxed at source, and also have rental income from the UK, which I'm taxed on via UK tax returns. No other British income whatsoever. 

 

Right from the start, I had (informally) been told by an accountant that I didn't have to 'double' declare any of the rental earnings, which seemed to make sense, but recently had a request to return a Common Reporting Standards form to my British bank.

 

The covering letter made clear that I needed to supply my German tax number, and that if the bank/HMRC subsequently decided to report my banking transactions to the German authorities, they'd do so.

 

Which really got me wondering for the first time whether I was actually doing the right thing.

 

I started to look online, and found references to both not filing a reurn and the opposite. Of course, the only certain way to find out is to approach an expert, and now in some panic I wrote to at least four accountants describing the situation, asking if I needed to file a tax return and if so, if they could help rectify a situation spanning several years.

 

One - supposedly an expert on expat taxation - replied to say that I definitely needed to file a return and had to present the UK rental figures.

 

Another expert wrote back to tell me that I'd need to give details of my 'worldwide income', including the UK rental.

 

Yet another stated that he was absolutely certain there was no need whatsoever to declare the income to Germany.

 

Who to believe?

 

The only thing that appears to shed some light on this is the advice, here, of the amazing PandaMunich, who at least cites several sources in support of her argument that - if I've read everything correctly - I don't need to declare.

 

But I'm so disturbed by this. It's obviously a really big deal if I'm inadvertently indulging in tax evasion (and I'm sure the excuse that "I really didn't know" never goes down well).

 

I'd just file a return and be damned with it, except that the rates I'm being quoted for the help needed are extremely high. 

 

And I can't believe that there's almost no consensus amongst the accountants I've approached.

 

How do I find this out once and for all? Would I need to write a letter to the Finanzamt or something to get an official response to the question?

 

I've been worried about this for weeks.

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@coeurquibat

You misunderstood what that letter from your UK bank is about, and therefore your post doesn't belong in this thread, which is about UK rental income.

The letter was not about your UK rental income, which as long as the UK still hasn't left the UK, you do not declare at all in your German tax return:

Once the UK leaves the EU, you have to declare your UK rental income in your German tax return as Progressionseinkommen, which does not mean that it will not be taxed again by Germany, but from then on it will raise your German tax rate on your other income.

 

*************************************************************************

 

The letter from your UK bank with the Common Reporting Standard form was about capital income (= interest income, dividends, profit from the sale of shares/funds/bonds, ...) that you had outside Germany.

This worldwide capital income is and always was taxable by Germany, since you are resident in Germany, see articles 10,11 and 13 in the double taxation agreement between Germany and the UK:

and:

 

If in the past, you did not declare your UK capital income in your German tax return, it is high time that you do so now, retroactively:

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1 hour ago, coeurquibat said:

No other British income whatsoever. 

 

If you really had no UK capital income, then you won't have any "forgotten" UK capital income to declare retroactively.

 

1 hour ago, coeurquibat said:

But I'm so disturbed by this. It's obviously a really big deal if I'm inadvertently indulging in tax evasion (and I'm sure the excuse that "I really didn't know" never goes down well).

 

Just fill in the details your UK bank asks for, i.e. your German Steuer-Identifikationsnummer and stop worrying:

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Wow. It's amazing to have received a reply from you, PandaMunich - thank you for helping me as you have done so many others.

 

OK. I'm no longer worried about the rental income. But now concerned about a lump of money that was generated by selling my flat, and left over after purchasing the new property (the one I rent out). This happened several years before I became resident in Germany.

 

The money - almost 25,000 pounds - has been in my Savings account (with the same bank that sent out the CRS form). Generates about one pound per year in interest - which I see now flies in the face of my claim that there was no other UK income whatsoever - but am fairly certain there is a 400 Euro threshold on this, anyway.

 

But does this sum continue to be classed as Capital income, or savings? I know this probably seems like an absurd question, but I've really no idea. If it's indeed capital then I will have retroactively report it, as you say. Sorry if it seems I'm being pretty hopeless. (And oh - Happy Easter to you!)

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It's capital income, and like all foreign capital income should have been declared in Anlage KAP line 15.

If your total worldwide capital income was up to 801€ (= Sparerfreibetrag), you won't end up paying any tax on it, but you still have to declare it every year in your German tax return.

For details please see the yellow section of the TT Elster wiki: https://www.toytowngermany.com/wiki/ELSTER

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Oh dear. What on earth constitutes savings, then, or is that just a term that laymen like myself use to no specific purpose? 

 

Butl in that case it looks as if I'll either have to report this to the Finanzamt, or HMRC will do it for me via the CRS form. I can't believe that I was barking up the wrong tree - absolutely convinced that the rent would be a problem, but that this money was somehow exempt.

 

I'm upset, of course, but thank you once again for your time and advice. What you do here is really wonderful.

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Savings are already taxed money that you deposit in a bank, e.g. the money you save out of your after-tax salary, or, as in your case, the already taxed profit you made from a real estate sale.

You can invest these savings, your capital, in different ways: you can simply keep them in an interesting-bearing account like you do, or invest them in shares, or funds, or bonds.

This capital then grows, i.e. generates income, either interest, dividends or profits from the sale of the shares/funds/bonds. This growth is of the type capital income, and has to be declared in your German tax return, no matter where in the world it was generated.

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Hi,

After reading PandaMunich’s posts, I was horrified to realise that the tax office in Duisburg has been overcharging me by counting my UK rental income, which is tax-exempt in Germany. From 2014 to 2016 they applied the Progressionsvorbehalt (i.e. higher tax rate), meaning I paid around €2,200 too much. Wanting to be honest, I asked the tax office about how the rental income was treated in advance when I originally bought the property. They wrote back that my entire income was in principle taxable and that they would review the situation during the tax assessment. Although they now admit that I was overtaxed, they say that the one-month time limit for objecting to the tax notices has expired. I then accused them of breaching their official duties (Amtspflichtverletzung) and the duty to investigate (Untersuchungspflicht) because they obviously didn’t bother to look into anything and applied tax law that was changed in 2007 (see PandaMunich’s posts)! As the tax office is refusing to budge, I’m wondering what to do next: Does it make sense to enter the €2,200 as a loss carry-over (Verlustvortrag) in my tax return for 2017 and, when they reject it, file an objection so that the matter is referred for a judicial review? Or would I have to sue for negligence (unfortunately I don't have legal insurance…)?

Any advice would be very much appreciated.   

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Does it say §164 AO on the first page of any of those Steuerbescheide?

 

5b2416cdd0e74_2018-06-1521_42_33-Freiste

 

If yes, you can get those Bescheide changed.

If not, you're out of luck, sorry.

 

All other change norms except §164 and §165 AO (§165 AO is only applied for general changes that are up in front of the BFH or German Constitutional Court which affect a lot of people, i.e. when a lot of people sued them about a matter, so not in your case), i.e. §129 AO, and §172 to §179 AO are heavily in favour of the Finanzamt, i.e. if they find a mistake you made, they can change the Bescheid retroactively, worst case reaching for up to 13 years into the past, but not if you find a mistake of theirs.

 

AO in English: https://www.gesetze-im-internet.de/englisch_ao/index.html

AO in German: https://www.gesetze-im-internet.de/ao_1977/

 

27 minutes ago, Sally C said:

Does it make sense to enter the €2,200 as a loss carry-over (Verlustvortrag) in my tax return for 2017 and, when they reject it, file an objection so that the matter is referred for a judicial review?

 

They would simply reject that expense, and then reject your Einspruch (= objection) once you do it.

There will be no automatic free judicial review, you would have to sue them in the Finanzgericht, and pay the court fees.

 

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Unfortunately the notices don't say "unter Vorbehalt der Nachprüfung". After looking at them again, I saw that they all contain the same sentence referring to section 32b of the German Income Tax Act: "Ausländische Einkünfte und/oder inländische Einkünfte, die nicht der deutschen Einkommensteuer unterliegen, in Höhe von ... wurden mit ... in die Berechnung des Steuersatzes einbezogen (Progressionsvorbehalt), § 32b EStG." Apparently they simply didn't understand/read/ignored the clause in that section referring to exemptions for income from renting out property in EU countries. It doesn't exactly inspire confidence in the knowledge of German tax officials.

 

I intend to complain to the Oberfinanzdirektion next (if only to let off steam) and look into whether it's worth the risk of suing. Thanks for your helpful and realistic answers!

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Hi everyone.

Right I am in the position now where my UK property income will need to be included in my tax return for 2020 when I do it next year.

I assume this is the case as Brexit has now happened.

Is there any official statement where I can find this, or is it still open to debate? I mean as the UK has left the EU this will surely be the case won't it?

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The taxation of UK property income shouldn't change as it is governed by the UK/German Double Tax Treaty, not EU membership or lack thereof.  

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4 hours ago, GaryC said:

The taxation of UK property income shouldn't change as it is governed by the UK/German Double Tax Treaty, not EU membership or lack thereof.  

 

What is new after Brexit is the income will need to be declared here and though you will not be taxed again it will raise your tax rate here on your other income.

 

Details on multiple threads including "UK rental income on German tax returns"

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On 6/15/2017, 11:24:32, PandaMunich said:

In that case the UK is more generous than Germany - if you have rental income in Germany and do not live in Germany then you never (well, not unless you get 90% of your worldwide income from Germany and opt to tax it all in Germany) get the German "personal allowance" (= Grundfreibetrag), no matter what your citizenship is.

 

For an example, please see the case of this Italian who wanted to know about the taxation of his German rental income: his German taxation started on his first € of rental profit (back then, the Grundfreibetrag was 8,004€)

 

 

So does the same apply to the German pension system? If you retire to another EU country, The Canary Islands for example, do you have to pay tax on the first Euro of income from a German pension? What if you were to retire to somewhere outside the EU, the UK being a good example, assuming it doesn't negotiate some deal here.

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The simple answer is yes, unless the 90% rule applies, or your non-German income is less than the Grundfreibetrag.  There are a few threads on here that have touched on that and it is an issue close to my heart as my wife and I are UK resident and receive/will receive German pensions. Take a look at this thread from this point onwards https://www.toytowngermany.com/forum/topic/312315-where-to-pay-tax-on-german-pension-received-in-uk/?do=findComment&comment=3793960

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On 14/06/2017, 16:03:53, PandaMunich said:

No, as long as the UK is still in the EU, you do not mention your British rental income at all in your tax return:

 

However, after the UK leaves the EU, you will have to declare it in Anlage V and Anlage AUS, and it will not be taxed again but will raise your German tax rate on your other income (e.g. on your German salary), this is called Progressionsvorbehalt.

 

What citizenship(s) you have is irrelevant, both before and after the UK leaves the EU. 

Just a quick question to check that this is still the case...ie UK rental income does not have to be declared on a German tax return? My husband’s new Steuerberater isn’t sure.

 

Another question is, if anyone happens to know...as I’m applying for Bafög for my daughter, is it necessary for my UK rental income to be declared as foreign income on the Bafög application? And, include copies of HMRC Self Assessments and the relevant notifications of zero tax due as income is far less than my personal allowance?  We have contacted Bafög though the advisors weren’t sure.

 

Many thanks in anticipation.

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Hi Everyone, 

On 10th December 2020 I got stranded in Bansin,  Germany when British Airways cancelled my return flight. As soon as I got out of quarantine I signed up as a resident in Bansin.  Although I have been for my interview I won't know the result for about 5 more weeks.

My primary home was in Bournemouth until 10th December 2020.

So who do I file my tax forms with?

Britain,  Germany or both?

When are the deadline for German tax returns?

Is there anyone on Usedom from this group who could help me out?

My holiday home in Bansin will become my primary residence if I achieve German Residents status.  

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