German tax for property sold overseas

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Hello

I am working in Berlin for more than 2 years now, with a BlueCard visa.

While I was a resident here, I bought an apartment in my home country. Now I would like to sell that apartment and bring the money to Germany (planning to buy a house here)

My question is: should I pay any taxes here as well? I will pay taxes and fees in my local country, but there's no direct cooperation between my country and Germany, so probably Finanzamt (or any other Government organisation here) won't be able to query them about my tax status.

This property was my savings over the years, not a source of income or investment. My only source of income is my salary in Germany.

 

To put it slightly differently: if I bring the cash here, will I still be a subject to tax? I mean, if I decide to buy a property by cash (hypothetically) or deposit my money to my German bank account in 10K instalments, will I get questioned/taxed?

This is a concern among many of my friends, as we would like to bring our savings here, but are concerned about the high taxes.

 

To be clear: I don't want to bypass any laws. I want to know

1- if my situation is subject to tax

2- if there's a legal way to decrease or cut the tax

 

Thanks

Ahmed

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As far as I know, if you have held that property for longer than 10 years, it's free of German capital gains tax when you sell it. Of course, your country of origin can tax it according to its own laws.

After you sell the property you should transfer the money to German in one go. Money transfers don't get taxed. Large transfers are usually queried by banks because of money laundering regulations, but that's not a problem: just tell them where the money comes from and if they want any documentation (like a copy of the sale contract) send it to them. Breaking up the transfer into smaller ones is usually a bad idea. There's no reason for you to do that and it'll only make you look suspicious. What you are proposing has a name in money-laundering speak, "smurfing", and banks look out for it and are required to investigate if it happens.

If you held your property abroad for less than ten years, you might have to pay German capital gains tax on it. I think it depends on whether you were the only one who lived there or if you rented it out. I'd check with an accountant. If Germany and your home country don't have any cooperation in tax matters, I'd presume that there's no treaty for the avoidance of double taxation, and that's bad news: if both countries tax the sale, you won't get tax relief in Germany for what you've already paid back home. Not declaring the sale even if it turns out to be taxable is dangerous. After buying a property in Germany, the Finanzamt sometimes asks where the money came from. They'll ask you; they don't need to ask your home country.

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18 hours ago, Smaug said:

If Germany and your home country don't have any cooperation in tax matters, I'd presume that there's no treaty for the avoidance of double taxation, and that's bad news: if both countries tax the sale, you won't get tax relief in Germany for what you've already paid back home.

 

@TheSame

 

With the exception of the sentence quoted above, I heartily endorse Smaug's reply.

 

Most double taxation treaties grant the treaty partner the exclusive right to tax gain from the sale of immovables (real estate) located in their country.

 

However, even in the absence of a treaty German domestic tax law (EStG § 34c) provides a credit procedure to claim a credit against your German taxes for taxes paid to the foreign country

 

So check first to see if there's a treaty and, if not, find yourself a Steuerberater to help determine whether and how you might be qualified to claim a foreign tax credit..

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Thank you @Smaug and @Straightpoop

 

I will talk to a tax lawyer here then to be on the safe side.

 

One more question: what would be the difference between bringing that money as a property sales money, vs personal savings?

I mean, suppose I sell the property and keep the money in a bank account or even cash in my country for 2 years (hypothetically) and then bring that money here as my savings.

Would that still be subject to tax?

The main reason of my confusion is that I don't know whether I should separate my savings from this money or not. Should I declare my savings when I bring it to Germany, be it in cash or bank transfers? (I have brought some of my savings in cash during the past 2 years, but never declared them, because I didn't even have an idea that's a thing. I just know that if you have cash >10K you should declare it in the airport/customs. I had also asked from my German bank before. They told me you don't need to declare anything <25K when you deposit to the account.)

 

To give you a concrete example: I sold my car before coming to Germany and brought 10K€ of it in cash here. I did not declare it and just put that money into my German bank account in an ATM. Was that a legal thing I did?

 

And if your answer is that the savings are not subject to tax, then I assume it would be a way for every foreigner to bring their money without paying any tax (which would be weird, considering Germany's strict and comprehensive tax laws)

 

Sorry for the long question.

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Well, I don’t know if it helps, TheSame, but we live in Greece and our house is up for sale as we want to return to Germany.

Our tax consultant in Germany has said “ no problem.” We have had the house for about seven years and have never rented it out. So, no tax in Germany if we get the buyer to transfer the money to a German bank account.

Tax will be payable in Greece ( if they get their act together!😂).

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10 minutes ago, john g. said:

Well, I don’t know if it helps, TheSame, but we live in Greece and our house is up for sale as we want to return to Germany.

Our tax consultant in Germany has said “ no problem.” We have had the house for about seven years and have never rented it out. So, no tax in Germany if we get the buyer to transfer the money to a German bank account.

But at the time of the sale won't you still be legally resident in Greece anyway? :unsure:

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Complicated, luna! We are both still legally resident in Hamburg! Have never done the Abmeldung for business reasons- still registered with the Hamburg Chamber of Commerce, still both pay German tax etc. We are in Greece and not subject to Greek income tax as our income comes from Germany- based clients.

We just pay Greek house, water, electricity, TV and telephone tax. ( For want of a different word.)

 

Our lawyer here just phones once a year and says “ bring x amount cash for the tax consultant.”

Don’t even know who our tax consultant is! Jiannis? Michaelis? Panagiotis?

Different world here!😂

 

( Which reminds me of a bar owner way back in 1989 or so when  i first arrived in Hamburg and went to a watering hole and we got chatting about something called Anmeldung. Which I had to do, he said. And I said I had never heard of it. And he ( a very liberal musician ) said: “ so if you don’t have Anmeldung, how can you control people?” )

 

 

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38 minutes ago, john g. said:

We just pay Greek house, water, electricity, TV and telephone tax. ( For want of a different word.)

:) It's the word I've put in bold that made me giggle, given the things that then follow... are you sure there wasn't something else? A few nibbles now and again to go with that water?! 

 

38 minutes ago, john g. said:

so if you don’t have Anmeldung, how can you control people?

Lovely. Same thing crops up in conversations between Brits and Europeans about identity cards. :rolleyes:

 

38 minutes ago, john g. said:

Jiannis? Michaelis? Panagiotis?

Theodopolopodous is my guess. ;)

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Not sure of anything else! Apart from Greek authorities won’t phone you back if you have a German mobile phone number!

Yep- ID card stuff. An Anglophone issue - same in the US, Australia, New Zealand etc. Anywhere the Brits poked their noses in!😂 But true.

 

That Theo geezer? No- loud- mouthed arsehole! No, not him!

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Is the Abmeldung not obligatory once you no longer spend most of your time and a given address?

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13 hours ago, TheSame said:

what would be the difference between bringing that money as a property sales money, vs personal savings?

I mean, suppose I sell the property and keep the money in a bank account or even cash in my country for 2 years (hypothetically) and then bring that money here as my savings.

Would that still be subject to tax?

 

You seem not to understand a fundamental aspect of income taxation:

 

It is the TRANSACTION (sale, transfer, exchange, gift, etc.) that produces the income that is the taxable event.  What you subsequently do with the proceeds from that transaction:  whether you stuff them in a mattress, transfer them to Germany, buy a Mercedes or a Big Mac, add it to your savings, donate it to your niece or a charity, etc. is of absolutely no relevance to whether and how much the preceding TRANSACTION is taxed.

 

Generally speaking, moving money - regardless of its source - from one place to another (without converting the currency and without changing its ownership) is not a taxable event.  

 

How you move it, however, can be expensive:  bank fees, etc. and, if you move it in a suspicious manner, you may find yourself having to pay for a lawyer to represent you vis-à-vis regulatory authorities whose interest you have piqued.

 

 

 

 

 

 

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Hi, my feeling here, not being a tax expert, is that if you follow all rules you will loose lot of money.

Try to get a mortgage here, rent your house there.

As soon as you involve "experts" they make money and you loose...this is true in my experience with "normal" people like us, of course millionaires will sell property and move money with no problems.

Good luck!

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