# Retiring to Germany



## Tlag

Hi, first post on the forum so be gentle please 

We are in the early stages of planning out our retirement in 4 yrs time. (Wife and I will still be in our 50's with good pension provision).

We have visited and stayed in Germany on many occasions and have fallen in love with the Rhineland-Pfalz area. 

We want to buy a property rather than rent. We would like a property which we could use as 3 separate living units so that when our children visit they have there own space, and eventually, the property would be left to them anyway so it is for the long term.

Now, to the questions. If at all possible, we would like to have a self contained unit that we could let out to tourists. This is not particularly for financial reasons, more for 'something to do' reasons. However, we don't want to fall foul of tax laws which seem daunting to say the least. Would we have to set up a company in Germany to do this, or is it possible to run the booking/payment side of it from the UK (through our daughter) and therfore pay taxes in English?

Sorry its a bit complicated but we are open to suggestions.


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## Nononymous

We'll just ignore Brexit for now.

I can say with near-absolute certainty that you would need to deal with the local German tax authorities if you were renting out a flat as a business.


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## kaju

Nononymous said:


> We'll just ignore Brexit for now.
> 
> I can say with near-absolute certainty that you would need to deal with the local German tax authorities if you were renting out a flat as a business.


Surely. They'd need to register at the local ordnungsamt and that's then shared with the tax authorities, possibly get more information from the Industrie-und Handelskammer for the region, in their case IHK Pfalz might be a place to start: https://www.pfalz.ihk24.de/en#


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## Tlag

Not a great deal we can do about Brexit at the moment. Obviously things may change which is why we are building up our knowledge with a few years to plan.

We guessed we would probably need to deal with the German tax rather than UK tax but just confirming that with those that know.

Thank you for the link, great info.


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## Bevdeforges

You may not need to set up a German company (I'm not sure about how that works there), but the general rule for "real estate" property is that rentals and other property income is taxed (and regulated) in the country where the property is located. So, even if you just rent out a room in your house, that rental income would be subject to German taxes first (along with whatever property taxes they have).
Cheers,
Bev


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## kaju

Bevdeforges said:


> You may not need to set up a German company (I'm not sure about how that works there), but the general rule for "real estate" property is that rentals and other property income is taxed (and regulated) in the country where the property is located. So, even if you just rent out a room in your house, that rental income would be subject to German taxes first (along with whatever property taxes they have).
> Cheers,
> Bev


Just so. 

As I said, when you register locally, that registration is shared with the tax authorities, so they know you are doing it. The IHK will know who Tlag needs to see locally to register and get acquainted with local requirements.

But...just a view that relates to my own opinion...we'll be back in Europe in the next 3 to 6 months, possibly with a year in Austria before settling down in Germany permanently. 

We could buy a place with an additional building to let for holiday rentals, but there are a couple of reasons why I'd never do it. First, you don't know who you might get. That might be less of an issue in Germany than some other places, then again, who knows? How might your neighbours like it? 

But the main reason is that you'd likely have a holiday season of some length, when you need to be there, or find someone to look after cleaning, changeovers, etc. Reducing profit and increasing your worry. You'd need to advertise, get business, and operate to certain German official standards.

Add local taxes if you're making any kind of profit too.

This is the issue for me, and why I wouldn't do it. Why would I invest money when the return will very often not be worth it, unless you do it with a higher volume of rooms/places. Are you sure there would be sufficient demand and not too much existing competition? Ready for the ongoing paperwork? So many people think it's easy (and for some it can be quite nice!), but many others invest and then find it hard to get business and regret ever doing it. 

If you pay $50,000 euros more to get an attached small ferienwohnung, how long will it take to recoup those costs? Many don't really even make a noticeable profit. You may not need to run at a profit, but if you don't, after a short while it might seem something of a millstone having to do the requisite work, and be there, with nothing really gained. There are plenty of other things to do in retirement! Consider googling for others' experiences of running holiday lets/gites/fremdenzimmer or ferienwohnungen. 

Even if you made 10% of your initial investment each year after tax and expenses, you still have to be there, have the time you need to manage the business, actually do the regular physical work, have risks for damage and needs for insurances etc, and generally reduced freedom. Are you up for that as you get older too? Are you prepared to be there and not leave for long in summer (the holiday season), when you can't get away to other places then? Chances are after all of that, it still might not pay for itself for 15 years or more! So for me, I'd use the money elsewhere or keep it invested, etc. 

Make sure you do enough research and think carefully about how it might be in the longer run. If you decided to stop after a couple of years, what would really be the point of starting? 

After all that, I'm really not saying "Don't do it!" - some people really enjoy it. But not everyone, so try to be as sure as you can that it would suit you, and that the business would be viable!


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## Tlag

Thank you,


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## Tlag

Thanks Kaju,

All great info and plenty to think about. This is why we are looking at things now rather than the couple of months before retirement. 

The 'holiday let' idea is not a 'must do', so potentially, more trouble than its worth.


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## kaju

Tlag said:


> Thanks Kaju,
> 
> All great info and plenty to think about. This is why we are looking at things now rather than the couple of months before retirement.
> 
> The 'holiday let' idea is not a 'must do', so potentially, more trouble than its worth.


Post-Brexit you might have issues getting the (cheaper) state health insurance cover too, since you'll be over 55, and coming from a non-EU country. That may change with the SPD's stronger influence in the new coalition, or not.

You have to have German health cover to live in Germany, and even basic private cover is not cheap at all - could be up to 690E per person per month!!!!!

Just another thing to find out about well before you move!


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## Tlag

I know, Brexit could change things a lot. 

We have looked at insurance costs which do look expensive at first glance, although any cost will seem expensive compared to what we currently don't pay on the NHS.

There is potential that we purchase a property prior to retiring and use it as a holiday home until retirement, maybe using it for a couple of months each year in bits, not a 2 month lump. This gives us time to renovate/decorate etc. I'm assuming normal holiday insurance is ok for that until we actually live there.


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## kaju

Tlag said:


> I know, Brexit could change things a lot.
> 
> We have looked at insurance costs which do look expensive at first glance, although any cost will seem expensive compared to what we currently don't pay on the NHS.
> 
> There is potential that we purchase a property prior to retiring and use it as a holiday home until retirement, maybe using it for a couple of months each year in bits, not a 2 month lump. This gives us time to renovate/decorate etc. I'm assuming normal holiday insurance is ok for that until we actually live there.


Yes, of course travel insurance would be fine. An EHIC card will still be enough until at least the Brexit date.

It would be a really nice way to settle in gradually too, so that when you made the permanent move the local area/shops/services/etc would all be pretty familiar. 

I always find it takes me a few weeks each time before I start to feel relaxed driving on the Autobahns! We go every 2 or 3 years mostly, (because we live in Perth) but normally for a few months each time. My wife is German, so her family is there and we have lived there a couple of times many years ago. Our kids are triple nationals!


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## ALKB

Tlag said:


> I know, Brexit could change things a lot.
> 
> We have looked at insurance costs which do look expensive at first glance, although any cost will seem expensive compared to what we currently don't pay on the NHS.
> 
> There is potential that we purchase a property prior to retiring and use it as a holiday home until retirement, maybe using it for a couple of months each year in bits, not a 2 month lump. This gives us time to renovate/decorate etc. I'm assuming normal holiday insurance is ok for that until we actually live there.


We don't know what requirements for moving from/to the UK will look like post Brexit.

Just as a word of caution: owning a property in Germany does not give a right to a residence permit (I have heard of visa nationals who were denied a visitor's visa after acquiring a property in Germany because the authorities thought they won't leave).

Also, there is no retirement visa for non-EEA nationals in Germany, so if you need a residence permit in the future, any application will be at the discretion of the local immigration department, unless there is a major change in law until then.


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## Mumi009

Tlag said:


> Hi, first post on the forum so be gentle please
> 
> We are in the early stages of planning out our retirement in 4 yrs time. (Wife and I will still be in our 50's with good pension provision).
> 
> We have visited and stayed in Germany on many occasions and have fallen in love with the Rhineland-Pfalz area.
> 
> We want to buy a property rather than rent. We would like a property which we could use as 3 separate living units so that when our children visit they have there own space, and eventually, the property would be left to them anyway so it is for the long term.
> 
> Now, to the questions. If at all possible, we would like to have a self contained unit that we could let out to tourists. This is not particularly for financial reasons, more for 'something to do' reasons. However, we don't want to fall foul of tax laws which seem daunting to say the least. Would we have to set up a company in Germany to do this, or is it possible to run the booking/payment side of it from the UK (through our daughter) and therfore pay taxes in English?
> 
> Sorry its a bit complicated but we are open to suggestions.


Talk to a German tax accountant (Steuerberater) for reliable and binding advice. You DO NOT want to have the German Finanzamt (tax authority) on your case. If you have income (and related expenses) in Germany, you pay taxes in Germany. Basta. The Steuerberater can advise you how to optimize your tax situation including any international taxation relevance. Steuerberater are not cheap, but their advice is worth it. It will keep you from paying hefty fines and maybe even out of jail. I am not a Steuerberater. I have been living as an expat for over 35 years in Germany.


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## Tlag

Mumi009, Great information, thank you.


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## SA Feather

Sorry, saw your thread only now. Wouldn't an orginization like Air B... be able to answer all your letting questions?


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