Heussen Rechtsanwaltsgesellschaft mbH | Schalast Rechtsanwälte mbB
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Anyone (including foreigners) can own and occupy real estate (including shares in property owning companies) in Germany.
There are no restrictions regarding the person owning and occupying real estate in Germany.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
To the extent the borrower, the borrower’s controlling (ultimate) shareholder or the borrower’s jurisdiction of incorporation is not listed on a (German or EU) sanction list, there are no restrictions on lending to foreign companies for the purchase of real estate in Germany.
An indirect restriction may result from the lenders’ know your customer checks: If due to (i) lack of transparency of the foreign jurisdiction of incorporation of the borrower and/or (ii) the borrower’s lack of cooperation, the lenders are not in a position to complete sufficient know your customer checks, they might be prevented from lending.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The acquisition of German real estate by way of an asset deal triggers statutory fees of the notary public ranging from 1.2% to 1.5% of the purchase price. For the registration of the legal title a registration fee is to be paid to the land registry. Further, Real Estate Transfer Tax (RETT) is triggered by transfer of German real estate. Depending on the Federal State where the real estate is located, this might be 3.5 % to 6.5 % on the purchase price. In turn, the German VAT does generally not apply to the sale and purchase of real estate.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Owners of real estate in Germany are subject to an annual property tax. The tax base is the ‘assessed value’ and the tax depends on several factors like location, size, use and the local municipal coefficient. The property tax can be fully passed on to any contractual occupier (incl. tenant) if contractually agreed.
Other taxes (income tax, municipal trade tax if applicable) are not triggered by the ownership in itself, but will be applied on any rental income.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
Under German law, there are no special incentives favouring foreign buyers of real estate.
However, there are possibilities to mitigate the tax burden by using tax-efficient corporate structures. E.g. the real estate transfer tax might be avoided under statutory law if the property is acquired via a share deal under certain circumstances. The municipal trade tax might also be avoided in some cases by using such a structure.
How is the ownership of Real Estate evidenced in your jurisdiction?
Legal title to German real estate is evidenced by registration of the owner in the public land register. The land register is a special division of the local court where the real estate is located (there is no nationwide land register in Germany).
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The identity of owners of real estate property in Germany is kept confidential to a certain extent: The ownership title is registered in the land register. However, the land register is not open for inspection by anyone, but its inspection requires a justified interest or the owner’s consent.