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Dubai Property in Annex V — Declaration Obligation for German Owners
Dubai Property in Annex V — Declaration Obligation?
Yes — provided you are subject to unlimited tax liability in Germany (residence or habitual abode in Germany). Rental income from Dubai is declared in Annex V. Under the Germany-UAE Tax Treaty 2010, Germany exempts this income — however subject to the progression proviso (§ 32b EStG [German Income Tax Act]). Capital gains are tax-free after expiry of the ten-year speculation period.
How Annex V Is Completed in Concrete Terms
- Location: country, city, address of the Dubai property
- Gross rental income: gross rents in EUR (Bundesbank reference rate at the time of receipt)
- Income-related expenses: depreciation, service charges, repairs, insurance, travel to the property, if applicable property management fees
- Tax abroad: 0 % (Dubai levies no income tax on rents)
- Entry in the tax treaty field: note Germany-UAE Tax Treaty 2010 — exemption subject to progression proviso
- Exchange rate obligation: use monthly Bundesbank foreign exchange rates or annual average rate, consistently throughout the tax return.
Calculation Example Progression Proviso
| Item | Amount |
|---|---|
| Taxable income Germany | EUR 100,000 |
| Dubai rental income (net after income-related expenses) | EUR 30,000 |
| Notional assessment base for tax rate determination | EUR 130,000 |
| Tariff income tax on EUR 130,000 (basic tariff 2026, without solidarity surcharge, without church tax) | approx. EUR 44,300 (tax rate approx. 34.1 %) |
| Tax rate on EUR 100,000 = 34.1 % | approx. EUR 34,100 |
| Additional burden vs. without Dubai income (approx. EUR 32,700 at 32.7 %) | ~ EUR 1,400 |
Simplified example calculation — exact values from tax software or tax advisor. Tariff 2026 subject to final promulgation.
Speculation Period and Capital Gains
§ 23 EStG [German Income Tax Act]: Private capital gains from real estate are tax-free if more than ten years lie between acquisition and sale. Within the period, the gain would theoretically be taxable — yet the UAE Tax Treaty 2010 assigns the right of taxation to the state of location (UAE), which however levies 0 %. Result: factually tax-free.
Exception commercial real estate trading: With more than three properties within five years, reclassification into commercial income threatens — then the progression proviso no longer applies; full German tariff including trade tax. Consultation with a tax advisor before the third property is mandatory.
Departure from Germany
- Surrender residence and habitual abode — relocate centre of life to Dubai
- Final tax return as unlimited taxpayer for the year of departure
- § 6 AStG [German Foreign Tax Act] only relevant for substantial shareholdings in corporations — direct property owners not affected
- Subsequently only limited tax liability for German income (rents DE, pensions etc.)
- Dubai rents then tax-neutral in Germany — provided clean proof of departure
Related Topics
- Taxes for German Dubai Investors
- Germany-UAE Tax Treaty — Real Estate
- 183-Day Rule and Tax Liability
- Exit Tax DACH-HNWI 2026
- Capital Gains Dubai Property
Sources
- Germany-UAE Tax Treaty 2010 (BGBl. 2011 II p. 538)
- German Income Tax Act § 21 (income from rental and leasing), § 23 (speculation period), § 32b (progression proviso)
- German Foreign Tax Act § 6 (exit taxation)
- Federal Central Tax Office — tax treaty application
- Deutsche Bundesbank — foreign exchange reference rates
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