GERMAN REAL ESTATE TAXATION 1. Acquisition of the

 18 rue Robert Stümper • L-­‐2557 Luxembourg T +352 26 38 92 40 • F +352 26 38 92 41
www.finimmo.com
GERMAN REAL ESTATE TAXATION 1. Acquisition of the real estate investment Selling of a real estate property under VAT regime The seller can opt to charge VAT if the acquiring party is classified as a VAT business. The VAT standard rate is set at 19%. Transfer tax and others acquisition costs The rate of the transfer tax varies from 3.5% to 5% depending of the state. Notary fees are established approximately between 0.3% and 0.8%. Mortgage registration fees are approximately 0.3%. Land registry fee is set at approximately 0.15% -­‐ 0.2%. Acquisition of at least 95% of the shares of a real estate oriented company is also subject to transfer tax. 2. Holding the real estate investment Net rental income, reduced by deductible expenses, is subject to corporation tax plus solidarity surcharge and trade tax at an approximately global rate of 30%. Depreciation is deductible only for business buildings at a rate between 2% and 3%. Interest expenses are deductible without limit to the extent of the interest income in the same year. The interest expenses exceeding the interest income will be deductible up to 30% of the company’s EBITDA (gross profit). The interest expenses exceeding the 30% of the gross profit should be carried forward. The limit of 30% is not applicable if the annual net interest expense is less than EUR 3 million. Lessor of business building can opt to charge VAT if the lessee is a VAT business using the real estate for transactions which allow an input VAT recovery. Otherwise leases are exempt from VAT. 3. Selling the real estate investment Domestic corporations are subject to corporate tax, solidarity surcharge and trade tax (approximately 30%). Individuals are subject to income tax up to 45% plus 5.5% of solidarity surcharge. In case of privately-­‐
held assets, no income tax is levied if a holding period of at least 10 years is observed. Autorisation d’établissement du Ministère des Finances luxembourgeois n° 26/12 en tant que Professionnel du
Secteur Financier agréé par la Commission de Surveillance du Secteur Financier luxembourgeoise.
N° R.C.S. Luxembourg B 94364
TVA LU 19788437
ING Luxembourg S.A.
IBAN LU72 0141 3413 6050 0000
BIC CODE : CELLLULL
1/2
18 rue Robert Stümper • L-­‐2557 Luxembourg T +352 26 38 92 40 • F +352 26 38 92 41
www.finimmo.com
In case of selling the shares of a real estate oriented company by a domestic corporation, 95% of the capital gain is tax free. In case of selling by an individual, 60% of the capital gain is subject to income tax up to 45% plus 5.5% of solidarity surcharge. Capital gains from shares in a resident company where real estate is more than 50% of assets are allocated to Germany in many double tax treaties. The present document only has an informative purpose, and constitutes neither a tax advice, nor any part of a contract or an offer. Autorisation d’établissement du Ministère des Finances luxembourgeois n° 26/12 en tant que Professionnel du
Secteur Financier agréé par la Commission de Surveillance du Secteur Financier luxembourgeoise.
N° R.C.S. Luxembourg B 94364
TVA LU 19788437
ING Luxembourg S.A.
IBAN LU72 0141 3413 6050 0000
BIC CODE : CELLLULL
2/2