German rental income for UK residents
Key facts
- Treaty
- UK–Germany Convention of 30 March 2010, amended by Protocols of 2014 and 2021
- Who taxes the rent first
- Germany — Art. 6
- UK relief method
- Foreign tax credit relief — Art. 23(2), helpsheet HS263
- UK form
- SA106 Foreign, income from land and property abroad
- Depreciation at home
- None for the building; replacement of domestic items relief only
- Tax years
- 6 April–5 April vs German calendar year: German tax is apportioned by days
- UK deadline
- 31 January after the tax year (online return)
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 United Kingdom 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 outside the EU/EEA, the Finanzamt may ask you to name an Empfangsbevollmächtigter in Germany. Letters posted abroad count as delivered one month after posting.
Recompute the profit for SA106
All your overseas lettings form one overseas property business, separate from any UK lettings; losses do not cross between them. The profit is computed under UK rules for the year to 5 April, by default on the cash basis. Three differences from the Anlage V result usually make the UK profit higher. There is no UK deduction for building depreciation, so German AfA is added back. Mortgage interest on residential property is not deducted; instead you get a basic-rate tax reduction, currently 20 %, on the lower of the finance costs, the property profit and your adjusted income above the personal allowance, with unused amounts carried forward. And furniture or appliances follow replacement of domestic items relief rather than German depreciation.
Credit the German tax — with the tax-year split
Article 23(2) of the treaty gives credit for German tax computed on the same income. HMRC apportions the German tax by days to the UK tax year: for 2025-26, roughly 270/365 of the German 2025 tax plus 95/365 of the 2026 tax. The credit cannot exceed the UK tax on the German profit, and unused German tax is neither repaid nor carried forward. German tax you overpaid — for example by not claiming a deduction available in Germany — is not fully creditable, so a correct German return directly protects your UK credit.
Convert at the rate when the income arose
The SA106 notes ask for the exchange rate at the time the income arose. HMRC publishes average rates for years ending 31 March and 31 December; they are not mandatory, but whatever method you use should be consistent and reasonable.
Example: the same flat, taxed in Germany and the United Kingdom
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 |
Basic-rate taxpayer, 2025-26, £1 = €1.18, German tax for 2025 and 2026 assumed equal, no other foreign income.
| UK profit: rent minus running costs (no AfA, no interest) | £8,475 |
|---|---|
| UK tax at 20 % | £1,695 |
| Finance-cost reduction: 20 % × £2,542 interest | − £508 |
| UK tax on the flat before credit | £1,187 |
| Credit for German tax (€933) | − £791 |
| UK tax still due | £396 |
Even with German tax paid, a UK resident usually owes some UK tax on the flat, because the UK profit ignores AfA and interest. A higher-rate taxpayer owes noticeably more.
Mistakes specific to UK residents
Copying the Anlage V result into SA106
The Anlage V profit is after AfA and interest. SA106 needs the profit before both, with interest handled through the 20 % reduction.
Filing SA106 before Germany has assessed
By 31 January the German Steuerbescheid for the second calendar year is not available. Use a reasoned estimate, then amend once the German figures are final.
Expecting the UK to refund excess German tax
If German tax exceeds the UK tax on the flat — possible with large UK-only interest restrictions reversed — the excess is lost. It is not carried forward.
When this page is not for you
- New UK residents using the foreign income and gains (FIG) regime from April 2025: no foreign tax credit on income claimed under it.
- Property held through a company, and co-owned property, which needs a separate German determination.
- The year you sell, and holiday or short-term letting.
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 UK residents?
Germany taxes the rent first through the standard non-resident return (ESt 1 C with Anlage V), from the first euro and with full deduction of mortgage interest and AfA. The UK then taxes the same flat on the SA106 foreign pages, recomputed under UK rules: no building depreciation, mortgage interest replaced by a 20 % tax reduction, figures for the UK tax year. German tax is credited, but only up to the UK tax on that income; any excess is lost.
Can I use the German loss against my UK salary?
No. A loss from the overseas property business stays in that business and is carried forward against future overseas property profits.
Does Germany give UK residents any allowance after Brexit?
Not on the standard non-resident return, which applies no Grundfreibetrag. You can apply for treatment as a resident under §1 Abs. 3 EStG — open regardless of nationality — if at least 90 % of your worldwide income is German-taxable or your non-German income stays below the Grundfreibetrag, certified by HMRC. A UK retiree with little UK income may qualify; a UK salary usually rules it out. Only the extra EU/EEA family reliefs of §1a EStG remain unavailable to UK nationals.
Last reviewed: by Yann Lephay.