Buying Dubai property from Germany: the treaty has lapsed

Since 1 January 2022 German domestic law applies on its own terms: section 34c, paragraph 6 switches off the domestic credit rules only where an agreement exists, and with none in place they are the only rules. Each link is in the statute. Section 1, paragraph 1 makes a natural person with a residence or habitual abode in Germany “unbeschränkt einkommensteuerpflichtig”. Section 2, paragraph 1 lists the seven categories subject to income tax, number 6 being “Einkünfte aus Vermietung und Verpachtung”, and attaches the qualifier “inländische” only to the limited liability case, so for unlimited liability the categories are caught wherever earned. Section 34d, number 7 settles it by classifying letting income as foreign income where the immovable property is situated in a foreign state.

Relief would come through section 34c, paragraph 1, which credits foreign tax “festgesetzte und gezahlte”, assessed and paid, against the German tax on that income. The UAE government portal states that “The UAE does not levy income tax on individuals”, and the Federal Tax Authority’s guide records that a natural person’s Real Estate Investment income is not subject to Corporate Tax where the activity requires no licence. Nothing paid means nothing to credit, so the rent lands in your German assessment as ordinary income at your own marginal rate.

This is the most repeated error in the German material on Dubai. Section 32b, paragraph 1, sentence 1, number 3 applies the special rate to income “die nach einem Abkommen zur Vermeidung der Doppelbesteuerung steuerfrei sind”. There is no agreement, so nothing is exempt under one and number 3 has nothing to attach to. Number 2 is confined by its own words to “Fälle der zeitweisen unbeschränkten Steuerpflicht”, a part year of German residence, which does not describe someone resident all year.

The Ministry’s own framing shows why. Its circular of 12 December 2023 describes Germany avoiding double taxation “durch Freistellung der Einkünfte (Freistellungsmethode) unter Berücksichtigung des § 32b”, and otherwise by “Steueranrechnung nach Maßgabe des § 34c EStG (Anrechnungsmethode)”. Both methods live inside an agreement. Without one the income is neither exempted nor rate-adjusted. It is taxed.

The rule that costs money quietly is section 2a. Paragraph 1, sentence 1, number 6(a) catches negative income from letting immovable property “wenn diese in einem Drittstaat belegen sind”, and paragraph 2a, number 1 defines a third state as one that is not an EU member state. The UAE is not. Such losses “dürfen nur mit positiven Einkünften der jeweils selben Art und... aus demselben Staat ausgeglichen werden”, may not be deducted under section 10d, and otherwise reduce positive income of the same kind from the same state in later years. The official Anlage AUS instructions carry the same ring fence. In the early years of a leveraged purchase, when interest can exceed rent, that is the difference between a loss that shelters your salary and one waiting on future Dubai profits.

Section 23 makes a disposal of land a private Veräußerungsgeschäft where “der Zeitraum zwischen Anschaffung und Veräußerung nicht mehr als zehn Jahre beträgt”, excepting property used exclusively for the owner’s own residential purposes. It carries no territorial words, and section 34d, number 8(b) contemplates a private disposal gain where the asset is situated abroad. A Dubai apartment sold inside ten years therefore produces a taxable German gain, with nothing to exempt and nothing to credit; after ten years it falls outside the provision. Gains under 1,000 euros in a calendar year stay free, but that is a Freigrenze, not an allowance.

Foreign income goes on Anlage AUS, and the official instructions say so “unabhängig davon, ob mit dem Staat, aus dem sie stammen, ein Doppelbesteuerungsabkommen besteht oder nicht”. They require the result to be computed under German rules, with foreign currency converted “nach dem maßgeblichen Kurs zum Zeitpunkt des Zu- oder Abflusses”. A dirham statement from a Dubai managing agent is a starting point, not the figure.

The purchase itself is a different question. Section 138, paragraph 2 of the Abgabenordnung lists four notifications on foreign activity: businesses and permanent establishments abroad, foreign partnerships, participations in foreign corporations above 10 per cent or 150,000 euros of cost, and control of a third state company. The list is closed and no item covers privately held foreign real property, so buying a Dubai apartment in your own name triggers no separate notification duty.

Foreign ownership is a carve-out. Article (4) of Law No. (7) of 2006 restricts ownership to UAE and GCC nationals and companies wholly owned by them, then permits freehold for non-UAE nationals “in certain areas determined by the Ruler”, and Regulation No. (3) of 2006 sets those areas by numbered land plot rather than by marketing name. Off-plan instalments sit in an account which Article (9)(1) of Law No. (8) of 2007 requires to be “dedicated exclusively to the construction of that Real Estate Development project”, beyond the reach of the developer’s creditors: ring-fencing, not a refund guarantee. The Land Department publishes its transfer fee as 2 per cent on the seller and 2 per cent on the buyer; a buyer bearing all 4 per cent is market practice.

On the residence route the two UAE government sources agree on the money and disagree on the term. The government portal gives the investor category a “Minimum capital of AED 2 million” and states five years for real estate; the ICP service page asks for a letter confirming ownership worth at least AED 2,000,000, states that “The property must be fully owned by the investor”, and gives ten years. We print both rather than pick one. AED 2,000,000 is about 468,600 euros at the rate below.

The Central Bank of the UAE showed 4.267868 dirhams to the euro as at 3 September 2026, so an AED 3,000,000 apartment is about 702,900 euros. The 4 per cent Land Department fee adds AED 120,000, about 28,100 euros; the trustee fee at that value is AED 4,200, the title deed AED 250, and the knowledge and innovation fees AED 10 each. Registration is therefore about AED 124,470, roughly 29,200 euros, for around 732,100 euros all in before agency commission, financing costs or service charges.

Two cautions. The Ministry of Finance publishes monthly euro reference rates for 27 countries and the UAE is not among them, and for the return the instructions require the rate at the date of each receipt or payment rather than a headline figure. And no German tax rate appears anywhere on this page, because none exists for this income: it joins the ordinary tariff with everything else you earn. Model the purchase on the cost of buying calculator, check the threshold on the golden visa calculator, and see what is selling in the off-plan catalogue.

No German tax percentage appears above, because none exists for this income. We found no circular addressing foreign rental income from a state with no agreement either, so the Ministry material cited on the two methods is its 2023 circular on employment income. We cannot prove exhaustively that no successor agreement exists; the January 2026 status circular records none, in force or under negotiation.

We do not print a golden visa duration as settled, because two government pages give different ones, and we found no official statement on whether an off-plan or mortgaged property qualifies. The euro rate is the Central Bank’s own figure, read from its rate feed after its public page returned an error to us. And we do not say when the ten year clock under section 23 starts on an off-plan purchase: that turns on the German concept of Anschaffung and on case law we have not read.