HowtoStartInvestinginGermany—ForeignInvestorGuide

Can foreigners buy real estate in Germany?

Yes — there are no restrictions on foreign ownership of German real estate. EU and non-EU nationals can buy residential and commercial property freely. A German bank account (for payment) and a German tax number (Steuernummer) are needed for the transaction. Non-residents must file a German Einkommensteuererklärung for rental income earned from German property.

What taxes do foreign investors pay on German investments?

For German stocks: Abgeltungsteuer (withholding tax) of 25% plus Solidaritätszuschlag applies to dividends and capital gains — typically withheld at source by the custodian bank. For real estate: rental income taxed at personal rate; capital gains on property held less than 10 years are taxable (Spekulationssteuer). For business investments: corporate tax (KSt 15% + GewSt ~14–17%) at company level, then withholding tax on dividends.

How does the §8b KStG exemption work for investment holdings?

§8b KStG exempts 95% of dividends received by a German corporation from participations in other companies (domestic or foreign), and 95% of capital gains on sale of shares in other companies. The remaining 5% is deemed non-deductible expenses and taxed. Effective dividend tax rate at holding level: ~1.5% (5% × 30%). This makes German GmbH holding structures highly efficient for building investment portfolios.

Do I need to register for German VAT as a foreign real estate investor?

Rental of residential property in Germany is VAT-exempt under §4 Nr.12 UStG. Rental of commercial property is also VAT-exempt by default, but landlords can opt into VAT (§9 UStG Verzicht auf Steuerbefreiung) to recover input VAT on construction and renovation costs — provided the tenant is a VAT-registered business. The option must be made in the rental agreement. We advise on the optimal election.

What is the minimum investment for a German investor visa?

Germany does not have a dedicated "investor visa" by investment amount alone. The §21 AufenthG self-employment permit requires demonstrating an economic benefit and viable business plan — no fixed minimum. The EU Blue Card requires a job with minimum salary (€48,300 in 2025 for regulated professions, lower). For significant investment, establishing a German company and becoming its managing director is the most reliable route to a residence permit.

What is the Grunderwerbsteuer (real estate transfer tax) in Germany?

Grunderwerbsteuer (GrEStG) is charged on German real estate purchases. Rates vary by Bundesland: 3.5% (Bavaria, Saxony), 5% (Baden-Württemberg, Bremen), 5.5% (Rhineland-Palatinate, Saxony-Anhalt), 6% (Berlin, Hesse), 6.5% (Brandenburg, NRW, Schleswig-Holstein, Thüringen). It is calculated on the purchase price and payable within 4 weeks of the purchase deed. Transfer of shares in a company holding real estate also triggers GrEStG if the acquirer reaches 90% of shares (RETT blocker structures are possible but increasingly restricted).

How does the German Sparerpauschbetrag (saver's allowance) work for foreign investors?

The Sparerpauschbetrag (EUR 1,000 per person, EUR 2,000 for jointly assessed couples for 2024) exempts that amount of investment income (dividends, interest, capital gains) from Abgeltungsteuer annually. German residents submit a Freistellungsauftrag to their custodian bank. Foreign investors with German securities accounts at German banks also benefit from the allowance by filing a Freistellungsauftrag. Foreign investors using non-German custodians must reclaim excess withholding via their annual German tax return.

What is the KfW development bank and how can it support investors in Germany?

KfW (Kreditanstalt für Wiederaufbau) is Germany's state development bank, offering subsidised loans for business investment, real estate development, energy efficiency, and innovation. Key programmes: KfW Unternehmerkredit (from EUR 25,000, subsidised rates), KfW Energieeffizienz (for energy-saving building investments), and ERP-Gründerkredit for startups. Foreign investors with a German GmbH can access most KfW programmes through German commercial banks (KfW lends via Hausbankprinzip — through commercial bank intermediaries).

What German government approval is needed for foreign acquisitions?

Non-EU foreign acquisitions of German companies in sensitive sectors require review under the Foreign Trade Act (AWG Section 55 et seq.). Notification is mandatory if the foreign acquirer reaches 25% of shares in companies involved in defence, critical infrastructure, healthcare, cloud computing, media, or AI. The BMWi (Federal Ministry of Economic Affairs) reviews and can prohibit or impose conditions. Processing: 2 months standard, 4 months if extended. Most commercial acquisitions proceed without issues.

How are German real estate rental profits taxed for foreign investors?

Foreign investors earning rental income from German real estate are subject to limited German tax liability (beschrankte Steuerpflicht) on German-source income. Net rental profit (after deductions for mortgage interest, depreciation at 2% linear or 3% for new builds from 2023, management costs, Grundsteuer, and insurance) is taxed at the progressive income tax rate. Annual Einkommensteuererklarung must be filed with the relevant Finanzamt. Capital gains on properties held less than 10 years are also taxable in Germany (Spekulationssteuer).