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Speculation Period Dubai Property — § 23 EStG for German Sellers

AXD Insights · DACH Tax Guide · May 2026

Speculation Period Dubai Property — § 23 EStG

For German unlimited taxpayers, § 23 (1) No. 1 EStG (German Income Tax Act) applies to Dubai properties as well. Sale within 10 years of acquisition = full personal income tax rate on the gain. After 10 years, tax-free. The Germany–UAE DTA (Double Taxation Agreement) has been terminated since 31 December 2021 — a situs-based exemption is no longer available.

What does § 23 EStG mean for Dubai?

§ 23 (1) No. 1 EStG governs private disposal transactions involving real estate (including foreign properties). The relevant period is that between the obligatory acquisition transaction and the obligatory disposal transaction. For Dubai off-plan, the SPA signing (Form F) typically counts as the acquisition date — not handover or title deed. Sale within 10 years: gain fully taxable; allowance of EUR 600 per annum. Sale after 10 years: tax-free in Germany. Owner-occupied property: exception under § 23 (1) No. 1 Sentence 3 EStG — irrelevant for Dubai investment properties.

Without a DTA — no exemption any more

The Germany–UAE Double Taxation Agreement (2010) was terminated by Germany as of 31 December 2021; a successor agreement is not in force (as of May 2026). Practical consequence: capital gains within 10 years are fully taxable in Germany. § 34c EStG credit runs empty — the UAE levies no income tax on sales. Ongoing rental income is also fully taxable in Germany without a DTA (no more progression proviso).

Gain calculation — the FX trap

Acquisition and disposal prices are converted into EUR at the respective spot rate (BMF administrative view on § 23 EStG). For Dubai, the following applies in addition: the AED is pegged to the USD — so EUR/AED fluctuates with EUR/USD. A strong EUR depreciation between purchase and sale increases the taxable gain even if the AED price remained stable. Loss offsetting only against other private disposal transactions (§ 23 (3) EStG).

Structuring options for DACH clients

Fulfil the holding period — the 10-year threshold is the clean solution. Holding structure (e.g. GmbH or UAE-FZ) — fundamentally changes the tax level but creates complexity with exit taxation (§ 6 AStG, German Foreign Tax Act). Relocation of residence — emigration is a standalone tax decision, not a § 23 workaround. Offset losses from other private disposal transactions.

Sources

§ 23 (1) No. 1 EStG (Private Disposal Transactions) § 23 (3) EStG (Allowance EUR 600, Loss Offsetting) § 34c EStG (Foreign Tax Credit) § 6 AStG (Exit Taxation) BMF — DTA List (Germany–UAE DTA terminated 31 December 2021)

Note: This presentation serves as orientation and does not replace tax advice in individual cases.

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Speculation Period Dubai Property — § 23 EStG for German Sellers