German rental income for residents of the Netherlands
Key facts
- Treaty
- Germany–Netherlands treaty of 12 April 2012, in force 1 Dec 2015, protocol 2016
- Who taxes the rent
- Germany — Art. 6, on the actual profit
- Dutch method
- Exemption by reduction — Art. 22(2) treaty, Besluit voorkoming dubbele belasting 2001
- Dutch treatment
- Box 3 asset; mortgage is a box 3 debt
- Dutch return
- Aangifte inkomstenbelasting: property under bezittingen, plus the double-taxation reduction
- Tax years
- Both calendar years
- German extras for EU residents
- §1 Abs. 3 + §1a option possible but rarely met with a Dutch salary
File the German return first
Rent from a flat in Germany is German-source income under §49 Abs. 1 Nr. 6 EStG, whatever your nationality. As a resident of the Netherlands you file the non-resident return: Hauptvordruck ESt 1 C with one Anlage V per property, through ELSTER, at the Finanzamt where the property is located.
- No Grundfreibetrag: §50 Abs. 1 EStG taxes the profit from the first euro.
- Deduct German Werbungskosten, mortgage interest and AfA under German rules.
- Deadline for a self-filed 2025 return: 31 July 2026. If you missed it, file now — the late-filing surcharge only becomes automatic 14 months after year-end, at the end of February 2027.
- Treatment as a German resident under §1 Abs. 3 EStG is open if at least 90 % of your worldwide income is German-taxable, or if your non-German income stays below the Grundfreibetrag (reduced for some countries of residence). With a salary at home, neither test is usually met — but a retiree with little foreign income may qualify.
- Living in the EU/EEA, you cannot be required to name a receiving agent in Germany; keep your address current with the Finanzamt.
Box 3, not rental income
In the Netherlands a second property is taxed in box 3 on a deemed return on its value, not on the rent you actually receive. For 2025 the deemed return on other assets is 5.88 %, on debts 2.70 %, the tax-free allowance €57,684 per person and the rate 36 %. The German flat is listed among your assets at its economic value in unoccupied and unlet state, and the loan financing it is a box 3 debt. Since July 2025, the Wet tegenbewijsregeling lets you show that your actual return was lower than the deemed one; for property, the actual return is rent plus change in value, with costs other than interest not deductible.
The reduction for German property
Because Article 6 lets Germany tax income from the flat, Article 22 of the treaty requires the Netherlands to exempt it by way of a reduction. Under the Besluit voorkoming dubbele belasting 2001, the foreign property minus the debts relating to it forms a foreign base, and your box 3 tax is reduced in the proportion that base bears to the total. For real estate the Belastingdienst always applies this exemption method. The entitlement follows from the treaty allocation — Germany may tax the flat — not from an actual German assessment, so it also applies in a year when the flat makes a loss and no German tax is due. The German return is a separate obligation, not a condition of the Dutch reduction.
Example: the same flat, taxed in Germany and the Netherlands
Illustrative only. Every country page uses the same German flat so you can compare. German side: tax year 2025, non-resident return, no other German income.
| Rent received incl. operating-cost advances | €12,000 |
|---|---|
| Running costs | − €2,000 |
| Mortgage interest | − €3,000 |
| AfA, 2 % of €100,000 building basis | − €2,000 |
| German rental profit | €5,000 |
| German income tax (§50 EStG, no Grundfreibetrag)Soli: 0 | €933 |
Single, 2025, flat worth €300,000 with a €150,000 loan, €20,000 in Dutch savings, deemed-return regime. Simplified: the exact allocation of the debt threshold to the foreign base follows the Belastingdienst calculation.
| Deemed return on the flat (5.88 %) | €17,640 |
|---|---|
| Deemed cost of the loan (2.70 %) | − €4,050 |
| Foreign base for the reduction | ≈ €13,590 |
| Box 3 tax including the flat | ≈ €3,359 |
| Reduction for German property | ≈ − €3,268 |
| Dutch box 3 tax left | ≈ €91 |
In this simplified case almost all Dutch box 3 tax linked to the flat disappears, while Germany taxes the real rental profit. The German return is the tax that actually bites.
Mistakes specific to Dutch residents
"It's in box 3, so there is nothing to file in Germany"
Wrong. Box 3 and the German return are separate: Germany taxes the actual rental profit and expects ESt 1 C with Anlage V for the flat, whatever the Dutch side looks like.
Leaving the flat out of the Dutch return
The flat must be declared under bezittingen even though most of its box 3 tax is reduced. The reduction is proportional, not a removal of the asset.
Using Dutch cost rules for the German return
Box 3 ignores maintenance and depreciation; Anlage V does not. Build the German figures from the German rules: Werbungskosten, interest, AfA.
When this page is not for you
- Property held through a BV or a German GmbH, or as business assets.
- Cross-border workers and Dutch residents employed in Germany.
- Holiday homes used by yourself, the year of sale, and the year you move.
In these cases, or when amounts are large, ask a Steuerberater and a tax adviser in your country of residence.
Common questions
How is German rental income taxed for Dutch residents?
Germany taxes the actual rental profit through the standard non-resident return (ESt 1 C with Anlage V), from the first euro. The Netherlands does not tax the rent itself: the flat sits in box 3 as an asset, and because Germany may tax it under the treaty, the Belastingdienst grants a reduction to prevent double taxation on the share of box 3 that relates to the flat. Both filings are needed; neither replaces the other.
Can I apply to be treated as a German resident from the Netherlands?
Only if at least 90 % of your worldwide income is German-taxable or your non-German income is below the Grundfreibetrag, certified on the EU/EEA form by the Belastingdienst. With a Dutch salary this rarely works.
Do I need a German address for tax letters?
No. As an EU resident you are not subject to the request to name a German receiving agent under §123 AO. Keep your Dutch address current with the Finanzamt.
Last reviewed: by Yann Lephay.