German Property

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BerProp

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We are looking to purchase a property in Berlin, and intended to purchase it through a GmBH. The main reason for this is as their is 4 of us involved, we thought this ownership vehicle would facilitate a more tax efficient, and easier exit strategy.

Is there any obvious downside to owning the property through a GmBH? Also, is it possible to simply purchase it through an Irish Ltd, and then register this Ltd in Germany?
 
BerProp said:
We are looking to purchase a property in Berlin, and intended to purchase it through a GmBH. The main reason for this is as their is 4 of us involved, we thought this ownership vehicle would facilitate a more tax efficient, and easier exit strategy.

Is there any obvious downside to owning the property through a GmBH? Also, is it possible to simply purchase it through an Irish Ltd, and then register this Ltd in Germany?
Click to expand...

AFAIK, you could choose the latter option, though you would probably have to register first with the German authorities.

A GmbH takes longer and is more expensive to set up and has higer capital requirements (Eigenkapital).
 
Have you gotten professional tax advice on which exit strategy (and other matters) is the most efficient?
 
San Martino,

We have got some professional tax advice, but with CGT in Germany due to change, and talk about the introduction of double taxation agreements on CGT by the Irish revenue commissioners, its all a bit up in the air.

My understanding is the that one of the downsides of Company ownership of a property is that when the property is sold, the co. must be pay CGT, and then the individual income tax.

Obvisously there are ways around this if the individual just sells their shares in the co. etc, but it is very difficult to predict what will happen in the future due to different circumstances of the 4 individuals involved.
 
Dontaskme,

My understanding is that to incorporate a GmBH, you need €25k share capital and costs about €3k. I don't know what to expect for annual running costs, or winding up costs.

The Ltd is cheaper to set up, with no share capital injection, but don't know if its a viable option both from the legal, and the lenders point of view.

Any thoughts on this?
 
BerProp said:
Dontaskme,

My understanding is that to incorporate a GmBH, you need €25k share capital and costs about €3k. I don't know what to expect for annual running costs, or winding up costs.

The Ltd is cheaper to set up, with no share capital injection, but don't know if its a viable option both from the legal, and the lenders point of view.

Any thoughts on this?
Click to expand...

http://www.economist.com/business/displayStory.cfm?story_id=4408089

The last paragraph in the abovelinked article suggests that you can do business in Germany using a company registered elsewhere in Europe.

I dunno about the lender's point of view.
 
Just a quick question on CGT. If I bought an apartment tomorrow (as an individual) for 50K and sold in in three months time for 60K, what CGT would i pay. Would anybody have a link to a table on CGT.

Thanks
 
Berprop,

You would be paying €1,746 in CGT.

10k Gain less annual CGT allowance of €1270 * 20%=1746.

Hope this helps.

Ranger
 
Cheers - that is from the Irish tax point of view. I was more wondering about what liability, if any, i would have to the German Tax authorities.
 
ranger said:
Berprop,

You would be paying €1,746 in CGT.

10k Gain less annual CGT allowance of €1270 * 20%=1746.

Hope this helps.

Ranger
Click to expand...
Allowable acquisition/enhancement/disposal expenditure expeneses and previously incurred capital losses could also enter the calculations here.
 
Hi
i am interested in refurbishing a run down apartment in a small eastern germany city. does anyone know if i need a construction permit to do this and if so how to obtain one
 
BerProp said:
Cheers - that is from the Irish tax point of view. I was more wondering about what liability, if any, i would have to the German Tax authorities.
Click to expand...

there is some info here [broken link removed] but I have no idea how up to date it is.

I think you will be penalised by higher taxes if you sell sooner after buying - if you hold the property longer you won't have to pay such a high percentage.
 
Hi guys,

I see there are a lot of questions on German property investment. We have been operating in Slovakia for the last 4 years and have (after gaining personal experience) recently expanded our scope to Germany, mainly Berlin.

If you have more questions we have a whole load downloadable pdf files on our website (www.alphare.net) about tax implications, costs you should expect, tenant’s rights and many more subjects of importance regarding the German property market.

You can also subscribe to our monthly news letters (containing tips advice and market news) on both Slovakia and Germany.

I hope these are of some help to you.

Regards,

Andrew
Alpha Real Estate Investments
www.Alphare.net
[email protected]
 
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