October 4, 2026

German Rental Income with Residence in Dubai: What Is Taxable

You have moved your residence to Dubai but still own a rented property in Germany. The obvious expectation: moving away ends your German tax liability. It does not. Rental income from German property remains taxable in Germany, regardless of where you live.

Why Germany continues to tax

For real estate, the situs principle applies internationally: tax is levied where the property is located. This allocation is found in almost every double tax treaty, and it applies all the more when, as between Germany and the UAE, there is no treaty at all.

When you move away, you switch from unlimited tax liability (unbeschränkte Steuerpflicht) to limited tax liability (beschränkte Steuerpflicht) under § 49 of the German Income Tax Act (Einkommensteuergesetz, EStG). Only your German-source income is then covered, and rental income is part of it.

What changes with the switch

Item	Residence in Germany	Residence in the UAE
Income covered	Worldwide income	German-source only
Basic tax-free allowance	granted	generally not
Income splitting for spouses	possible	no
Tax return	mandatory	mandatory
Income-related expenses	deductible	deductible

Losing the basic tax-free allowance (Grundfreibetrag) is the point that costs the most. As a person with limited tax liability, you pay tax on the profit from the first euro. Anyone who previously counted on an allowance will face a noticeably higher bill.

What you can still deduct

The way income is calculated does not change. From the rental income you deduct the income-related expenses (Werbungskosten):

Depreciation on the building
Interest on the financing, not the repayment
Maintenance and repairs
Service charges (Hausgeld), insofar as they cannot be passed on to the tenant
Management costs, property tax, insurance
Travel costs to the property, within narrow limits

Depreciation on buildings held as private assets is generally two percent per year, or three percent for buildings completed from 2023 onwards. For certain newly built residential buildings, declining-balance depreciation is also available. Which option applies depends on the year of construction and the use.

The tax return remains mandatory

Persons with limited tax liability must file a German income tax return. The tax office in whose district the property is located remains responsible.

The filing deadlines are the same as for persons with unlimited tax liability
Without a German address, the tax office can require an authorised recipient (Empfangsbevollmächtigter)
Advance tax payments continue to be set if the tax reaches a certain amount
Deregistering with the residents' registration office does not replace notifying the tax office

The most common mistake in this situation is not a tax mistake but an organisational one: post no longer reaches the recipient, deadlines expire, estimated assessments are issued. An authorised recipient in Germany solves this.

What happens in the Emirates

At the level of the private individual, the UAE does not levy income tax, not even on foreign rental income. So no second tax arises there.

This leads to the situation many do not expect: there is no double taxation, but no relief either. The German tax remains in full, because nothing arises in the Emirates that could be credited.

The progression clause no longer applies

Under unlimited tax liability, certain tax-exempt foreign income increases the tax rate on the remaining income (progression clause, Progressionsvorbehalt). This effect does not apply under limited tax liability.

Your income from Dubai, such as salary, distributions and investment income, is left out of the German assessment. Only the German rent is taxed, without regard to your other income. This is one of the few points where moving away simplifies the calculation.

Selling the property

When you sell, the ten-year holding period (Spekulationsfrist) continues to apply. If you sell within this period, the gain is taxable in Germany, even with limited tax liability. After the ten years have passed, the gain on private assets remains tax-free.

If you are considering a sale anyway, you should factor this period into your relocation planning. It continues to run regardless of your residence.

If the property is held through a company

Some owners consider contributing the property to a company in order to end their personal tax liability. This does not solve the problem; it shifts it.

The contribution itself can trigger real estate transfer tax and is often treated as a disposal for tax purposes
A German company is subject to corporate income tax and trade tax on the rental income
A foreign company holding German property remains subject to limited tax liability in Germany
With a company in the Emirates, German shareholders also face the question of CFC taxation (Hinzurechnungsbesteuerung), because letting property generally counts as passive income

The state where the property is located retains its taxing right in each of these variants. If you are considering a restructuring, you should therefore not approach it with the aim of avoiding German tax, but at most to organise liability or succession.

How we see it

The German property is the part of your assets most often underestimated when moving away. It is not a problem, but it ties you permanently to German tax law at a time when you actually wanted to close that chapter.

From our client work: if you keep a rented property, you still need a tax adviser and an authorised recipient in Germany. This costs a few hundred euros a year and reliably prevents the expensive cases: estimated assessments, late payment surcharges, enforcement notices sent to an address where nobody lives any more.

Our advice: clarify before the move whether the property fits your long-term plans. If you want to sell it anyway and have completed the ten-year period, selling before you move away gives you a much simpler starting position. This calculation belongs before deregistration, not after.