Taxes and Optimization in Germany: How to Pay Less and Sleep Well
Any investor or property owner in Germany faces the question: how to pay taxes correctly while legally optimizing them?
Let’s look at which tax advisor (Steuerberater) to choose, which expenses can be deducted, and how taxation differs between private ownership and GmbH/UG.
Which Steuerberater Do You Need?
Germany’s tax system is complex, and penalties for mistakes are high. Therefore, choosing the right tax advisor is critical.
Tips for choosing:
- Choose a Steuerberater specializing in real estate (Immobilien) and capital investments.
- Ensure they have experience with international clients.
- Ask if they provide proactive tax consulting (not just filing returns but also planning optimization).
- Availability of digital accounting and an online portal is a big plus.
Saving on a Steuerberater almost always leads to bigger losses.
Expenses You Can Deduct (Werbungskosten & Betriebsausgaben):
When renting out property, many expenses can be deducted from taxes. Typical ones include:
- Mortgage interest (Zinsen) and financing costs.
- Depreciation (AfA) of the building and equipment.
- Service charges and condominium fees paid by the owner.
- Costs for property management and tax advisor.
- Repairs, renovations, modernizations.
- Travel expenses to the property.
- Insurance (building, liability).
? Important: expenses must be documented and directly related to the property.
Private Ownership or GmbH/UG: What’s the Difference?
Private investor (natural person):
- Income tax up to 45% + solidarity surcharge + church tax (if applicable).
- Rental income is taxed as rental and leasing income.
- Advantage: simple structure, no obligation for full accounting.
- Disadvantage: high tax progression at higher incomes.
GmbH/UG (corporation):
- Corporate tax (KSt) = 15% + solidarity surcharge.
- Trade tax (varies by municipality, approx. 14–17%).
- Effective tax burden usually ~30%.
- Advantage: lower tax burden on profits, professional structure, easier for joint ventures.
- Disadvantage: obligation for accounting, higher administrative costs, dividend tax (25%).
? The optimal choice depends on the scale of investment and reinvestment plans. Many investors combine both approaches.
Conclusion
- A good Steuerberater helps reduce taxes legally.
- Deducting expenses (Werbungskosten, AfA, financing) is key to tax optimization.
- The difference between private ownership and GmbH/UG can reach tens of percentage points, so it’s crucial to plan the structure in advance.
✅ Tip: If you plan long-term investments or multiple properties, consider GmbH/UG. For 1–2 apartments, private ownership is usually enough.
