Germany

EMET works with several recurring use cases on German real estate ownership.

Residential property held personally. A non-resident client (resident in Russia, Switzerland, Italy or Cyprus) owns an apartment or house in Berlin, Munich or Frankfurt — for family use or as an investment with rental yield. Ownership is direct, without a corporate wrapper. The tax position is beschränkte Steuerpflicht (limited tax liability) on German-source income.

Commercial property through a German Vermögens-GmbH. An income-producing real estate investment (offices, retail, logistics) held through a local German entity. The structure delivers a corporate tax regime (Körperschaftsteuer plus Gewerbesteuer) and limited liability. For Russian residents the GmbH is a controlled foreign company (CFC) with the corresponding Russian reporting obligations.

Multi-generational ownership. German real estate as part of family capital intended for the next generation. The decisive factor is Erbschaftsteuer on Inlandsvermögen, which applies even when neither the deceased nor the heirs are resident in Germany.

Exit — sale after a long holding period. Where ownership qualifies as private asset management (no indicia of commercial real estate trading), §23 EStG applies (Spekulationsfrist, the ten-year rule): the sale of residential property by an individual after a ten-year holding period generally falls outside German capital gains taxation. This is the central factor in exit timing; the boundary between private asset management and gewerblicher Grundstückshandel (commercial real estate trading) is a separate analysis where the client transacts on multiple properties.

The tax treatment of rental income depends on whether the property is held directly by the individual or through a German entity.

Direct ownership by a non-resident individual. Income tax is calculated on the German progressive scale (14-45%) on net rental income after expenses — mortgage interest, operating costs, insurance and depreciation (typically 2% per year on the building portion of residential property). The basic personal allowance (Grundfreibetrag) generally does not apply in full to non-residents. The Solidaritätszuschlag adds approximately 5.5% on top of the income tax and forms part of the effective German tax burden on rental income for non-resident investors. Church tax (Kirchensteuer) does not normally apply to non-resident foreign owners.

Through a German Vermögens-GmbH. A corporate regime applies: corporate income tax (Körperschaftsteuer) at 15% plus the Solidaritätszuschlag, plus municipal trade tax (Gewerbesteuer) at 7-17% depending on the local Hebesatz. For a GmbH engaged solely in managing its own real estate without trading activity, the erweiterte Kürzung mechanism may be available — effectively exempting rental income from Gewerbesteuer subject to strict conditions on the character of the activity. On distributions to the shareholder, withholding tax (Kapitalertragsteuer) of 25% applies, with potential DTT-based reduction for non-resident shareholders.

For a Russian-resident owner of a Vermögens-GmbH, the German entity is simultaneously a controlled foreign company on the Russian tax side — with the related annual obligations on notification, financial reporting and potential taxation of undistributed profit.

The German tax position never works in isolation — it interacts with the client's tax residency position and banking infrastructure.

Russian resident with a German Vermögens-GmbH. The German company becomes a CFC for the Russian tax side. Annual obligations include CFC notification, financial reporting of the controlled company to the Russian tax authority, and taxation of undistributed profit where triggered. EMET handles both jurisdictions in coordination — Russian CFC compliance and German compliance.

Foreign tax credit for the Russian-resident owner. Tax paid in Germany on rental income or capital gains from German real estate can, as of today, be credited against Russian tax — the bilateral treaty framework continues to remain relevant in this area. This eliminates the double-taxation risk for Russian clients holding property directly and materially affects the calculation of the combined burden.

Italian resident with German residential property. As the situs state, Germany retains primary right of taxation on income from the property. For an Italian resident the further treatment depends on the chosen regime: the standard regime allows credit for German tax against Italian tax under the double-taxation treaty; under the forfait regime foreign-source income is covered by the fixed payment, and credit treatment is determined separately by the specific structure.

Swiss resident with German real estate. The Switzerland-Germany DTT places primary taxation in Germany. For a client on Pauschalbesteuerung the considerations are separate — German-source income is typically integrated into the Swiss lump-sum taxation base, which also requires individual assessment.

Swiss banking — sale proceeds and rental income. Most EMET clients coordinate proceeds from German real estate with their Swiss banking infrastructure (UBP, Edmond de Rothschild, Pictet, Lombard Odier). KYC alignment — centralising documentation and source-of-funds logic across all of the client's banks — is a central part of EMET's work. German real estate ownership also intersects with CRS reporting, beneficial ownership disclosure and source-of-funds review across banking institutions; EMET ensures the German-side documentation is coherent with the position taken across all of the client's bank relationships.

Russia-Germany DTT. The bilateral treaty governs the taxation of rental income, capital gains and inheritance positions on German real estate. The concrete application of DTT mechanisms in the current geopolitical context calls for case-by-case analysis on each transaction.

EMET's German practice runs across several recurring configurations.

Configuration A — Russian / Swiss / Italian resident with residential property

Direct ownership of an apartment or house in Berlin, Munich or Frankfurt. EMET handles: annual Einkommensteuer filing (with a Steuerberater engaged where complexity warrants), coordination with the client's home-jurisdiction tax reporting, and exit preparation against the ten-year rule.

Configuration B — Russian resident with commercial property through a Vermögens-GmbH

An income-producing investment held through a German entity. EMET runs both jurisdictions: the German corporate compliance (KSt, GewSt, USt) and the Russian CFC compliance (notification, financial reporting, taxation of undistributed profit where triggered).

Configuration C — Multi-property portfolio

A client holding several assets of different types — residential held directly plus commercial through a GmbH. EMET coordinates all layers.

Configuration D — Inheritance configuration

Multi-generational ownership oriented toward transfer to the next generation. EMET handles the inheritance-tax position — coordination with the Notar, the lifetime-gift-vs-inheritance decision, and Familienpool-type structuring where appropriate.

Configuration E — Exit transaction

The sale of long-held property. EMET handles timing decisions (the ten-year rule), structuring (sale through personal ownership versus a sale of Vermögens-GmbH shares), and coordination of proceeds with the client's Swiss banking arrangements.

EMET runs the strategic and coordination side of the work. Filings to the Finanzamt are prepared and submitted by EMET directly through the client's tax profile (Steuernummer / Steuer-ID); where the client does not yet hold a German tax number, EMET assists in obtaining it and establishing ongoing Finanzamt communication. A local Steuerberater is engaged as a separate specialist layer in complex situations — Vermögens-GmbH corporate reporting with Bilanz and Gewerbesteuer, specific audit work, non-standard DTT positions — not as a mandatory intermediary.

This is an engagement format close to a multi-family office: the annual return is only one element of the ongoing work on the client's position. The principal value is regular coordination of the position throughout the year.

The standard engagement cycle runs through four phases.

1. Structural positioning

Review of the existing ownership: direct versus GmbH, the client's tax residency position, exit horizon, inheritance plans. The structuring decision on a new acquisition. For existing holdings — analysis of whether restructuring is warranted (for example, moving residential property between personal name and a GmbH or vice versa). Russian CFC implications where the client is a Russian resident.

2. Setup and Steuerberater engagement

Establishing the client's tax profile with the Finanzamt (Steuerliche Identifikationsnummer, Steuernummer for the property) and onboarding any tax representation arrangements required for the case at hand. Engaging the Steuerberater partner on the client file where complexity warrants. For a GmbH — corporate setup or review of an existing entity.

3. KYC alignment (the client's compliance position across institutions)

A consistent source-of-funds logic across all of the client's banks (Swiss, Russian, German). Documentation consistency across jurisdictions. Preparation for bank and regulatory inquiries as a coherent position.

4. Annual engagement and long-term planning

Annual Einkommensteuer (for individuals) or KSt + GewSt + USt (for the GmbH), with the Steuerberater engaged where appropriate. Coordination with Swiss banks across the year. Russian CFC reporting for Russian residents holding through a GmbH. Around the eighth-to-tenth year of ownership — the conversation on exit timing relative to the ten-year rule. Inheritance pre-planning where applicable.