Buying property in Dubai from Germany

The short version

If you live in Germany, a property in Dubai is taxed in Germany — much like a property in Germany.

• Rent from Dubai is taxed in Germany at your normal rate. There is no treaty, and no UAE tax to credit.
• Selling within ten years of buying makes the gain taxable in Germany, unless you lived in it yourself.
• A loss from letting the property cannot reduce your German tax. It only counts against rent from the UAE.
• Every payment above €50,000 to the developer is reported to the Bundesbank by the seventh working day of the following month.
• You can buy without flying in, but a German power of attorney goes through five official steps before Dubai accepts it.
• Your price is in dirhams and your money in euros. In every three-year stretch since 2015, the euro’s highest month-end rate was at least 12% above its lowest.

“Tax-free” is not true for you

There has been no double tax treaty between Germany and the UAE since 1 January 2022. The treaty of 2010 ran for a fixed term and expired on 31 December 2021. Germany Trade & Invest, the federal agency for foreign trade, confirms the expiry and noted in 2024 that no new agreement was being pursued. The Federal Ministry of Finance’s official list of tax treaties, as at 1 January 2026, records it as applying, in principle, from 1 January 2009 until 31 December 2021.

If you have a home in Germany or usually live there, you are taxable in Germany on all your income, wherever it arises (sections 1 and 2 of the Income Tax Act, EStG). Rent from a property in Dubai is income from letting (section 21) — foreign income, but yours to declare.

Normally, tax paid abroad is credited against German tax (section 34c). That only works if the other country taxed the income. The UAE does not tax a private individual’s rental income: income a natural person earns from real estate investment is excluded from UAE corporate tax, as long as it is not, and need not be, carried on under a business licence. So there is nothing to credit. Germany Trade & Invest again: in the case of the UAE, both of Germany’s methods of relief lead to no relief, because the UAE levies no tax.

For you, a flat in Dubai is taxed much like a flat in Dortmund. “Tax-free” is true in Dubai and wrong in Germany.

If you hold the property through a company, or letting becomes a licensed business, UAE corporate tax can come into play. That is a question for your tax adviser before you buy, not after.

Losses stay in Dubai

German law ring-fences rental losses from property outside the EU and the EEA. A loss from letting property in such a “third country” — the UAE is one — can only be set against rental income from the same country. It cannot reduce the tax on your salary, and it cannot be carried back or forward the usual way; it only reduces your UAE rental income in later years (section 2a EStG).

This bites hardest in the first year after handover, when the unit may stand empty while the service charge, furnishing and travel costs run. None of that lowers your German tax that year.

Selling: the ten-year rule

A gain from selling a property within ten years of buying it is taxable in Germany as a private sale (section 23 EStG). The rule makes no exception for property abroad. The ten years run between the dates of the binding contracts — the purchase agreement and the sale agreement — not the dates the title changes hands.

Two exceptions:

• Own use. No tax if you used the property only to live in yourself, or did so in the year of the sale and the two years before it.
• Small gains. If all your private sale gains in a calendar year come to less than €1,000, they stay tax-free. At €1,000 or more, the whole gain is taxable, not just the part above.

Selling before handover. Many off-plan buyers sell their purchase contract before the building is finished. German courts have treated a claim to a property like the property itself, which points to the same ten years. But no court has yet decided the case of an off-plan contract, let alone a foreign one. Do not assume the one-year rule for other assets applies — ask your adviser before you sign the purchase.

Inheritance and gifts

If the person who dies or gives, or the person who receives, is resident in Germany, German inheritance and gift tax applies to everything — the Dubai property included (section 2 of the Inheritance Tax Act, ErbStG). German citizens still count as resident for five years after moving abroad, even without a home in Germany.

Moving to Dubai does not end it automatically

German tax liability follows where you live, not your passport. A home you keep for your own use is enough (section 8 of the Fiscal Code, AO). So is a continuous stay in Germany of more than six months — short interruptions do not break it — unless the stay is purely for visits, a holiday, a cure or similar private purposes and lasts no more than a year (section 9 AO). And German citizens who were fully taxable in Germany for at least five of the previous ten years, move to a low-tax country and keep substantial economic interests in Germany remain taxable on more of their income for ten years, once that income exceeds €16,500 a year (section 2 of the Foreign Tax Act, AStG). If you are planning a move, that is a conversation for your adviser before the move.

What you report in Germany

Payments above €50,000 to someone abroad are reported to the Bundesbank. Residents of Germany, private individuals included, must report every payment of more than €50,000 to or from a foreign person. The Bundesbank names the purchase of a property as an example. The deadline is the seventh working day of the following month. Private individuals who make such payments only rarely can report them by email or phone, without a reporting number. Anyone who reports regularly needs a reporting number. Not reporting, or reporting late, is an administrative offence with a fine of up to €30,000.

The threshold was €12,500 until the end of 2024. Many pages still quote the old figure.

The law sets the threshold per payment, in euros at the time you pay. For a purchase of AED 2 million on a typical off-plan plan, at the rate of 2 October 2026 (4.133 dirhams to the euro):

Your rent and any gain on a sale go into your German tax return as usual.

Buying without flying in

Off-plan. The developer registers your purchase in Dubai’s interim property register, known as Oqood, through the Land Department’s online portal. For a non-resident buyer, the documents the Land Department lists are a copy of the signed sale and purchase agreement and a copy of a valid passport. The agreement must be registered within 90 days of signing. The Land Department’s description does not ask you to be there in person. Whether you can sign remotely is the developer’s practice, not a published rule — ask before you reserve.

A finished property is transferred at a Land Department registration trustee office, between the parties “or their legally authorized representatives”. If you are not there, someone signs for you on a power of attorney.

A German power of attorney goes through five steps before Dubai accepts it. The UAE is not a party to the Apostille Convention, so an apostille is not enough:

Then it needs a legal translation into Arabic by a translator registered with the UAE Ministry of Justice. UAE law does not let authorities certify, or courts accept, any other translation.

Since July 2025, Dubai also checks the wording and the age. The Land Department’s Circular No. 29/R/2025, as summarised by Dubai law firms, accepts a power of attorney issued abroad only as the original paper document, and only if it names the transaction explicitly — “sale of real estate”, or for a purchase, wording such as “purchase for oneself with explicit specification of the ownership share”. General wording like “full authority to manage property” can be rejected.

How old it may be is less settled. The law firms read the circular as two years for any transaction; the Land Department’s own FAQ gives two years for selling, mortgaging or gifting a property and five years for buying one, counted from notarisation. Plan on two years, and have the wording checked in Dubai before you sign it in Germany.

If you later sell, the proceeds are paid by manager’s cheque in the name of the owner on the title deed. A power of attorney can sign for you, but it cannot simply receive the money. See Proving where your money came from.

The currency: your price is in dirhams, your money in euros

The dirham is pegged to the US dollar at 3.6725 (Central Bank of the UAE). The rate that moves your price is the euro against the dollar.

Since January 2015, the month-end rate has ranged from 3.599 dirhams to the euro (September 2022) to 4.557 (January 2018). For a property priced at AED 1.5 million, that is the difference between €416,782 and €329,164 — €87,618 for the same flat.

An off-plan payment plan runs for years. Over every 36-month stretch since 2015, the highest month-end rate was at least 12% above the lowest — typically about 18%, and up to 25%. In the last three years alone, the same AED 1.5 million cost €394,560 in December 2024 and €344,780 in January 2026.

You can fix a rate in advance with a forward contract through your bank; it binds you to the amount and the date. Or you convert each instalment when it falls due and accept the swing. Either way, plan your instalments in euros with room for that swing, not at today’s rate.

Questions for your tax adviser

• How do I declare rent from Dubai, and which costs can I deduct — service charge, depreciation of a building abroad, financing?
• How does the ring-fence for third-country losses treat costs before the first tenant?
• If I sell my purchase contract before handover, which holding period applies?
• Does use as my own holiday home count towards the exemption?
• Should I hold the property myself or through a company — and what would UAE corporate tax mean then?
• What happens with inheritance or gift tax if the property goes to my children?
• If I move to Dubai: when does my German tax liability end, and does section 2 AStG apply to me?

Questions and answers

Related guides

• Proving where your money came from
• What a guaranteed return is actually worth