In short
Germany and Spain have a Double Taxation Agreement (DTA) that prevents you from paying full tax in both countries on the same income. For German owners of Spanish property: Spain has the primary right to tax Spanish property income and capital gains. Germany exempts this income from German tax but uses it for Progressionsvorbehalt (progression clause) — it can push your German tax rate up on your remaining German income.
The Germany–Spain DTA: key facts
The current DTA between Germany and Spain was signed in 1966 and has been updated several times. The key provisions for non-resident property owners:
Property income (Modelo 210 imputed income): Spain has the exclusive right to tax imputed income from Spanish property. Germany exempts it from German income tax — but applies the Progressionsvorbehalt.
Rental income: Spain has the primary right to tax rental income from Spanish property. Germany exempts it but applies Progressionsvorbehalt.
Capital gains on property sale: Spain taxes the gain under the 3% withholding / Modelo 210 regime. Germany also has the right to tax, but credits the Spanish tax paid (Anrechnungsmethode applies for capital gains in the DTA).
Progressionsvorbehalt: the key German concept
Even though Germany exempts your Spanish property income from German tax, it uses that income to calculate your German tax rate on your other German income.
Example:
- German salary: €80,000
- Spanish imputed income: €3,000 (exempt from German tax)
- For German tax rate calculation: Finanzamt treats you as if your income is €83,000
- Your marginal German rate is therefore slightly higher, applying to your actual €80,000 German income
For most owners with a modest Spanish property, this effect is small — often €100–€400 extra German tax per year. For owners with large Spanish rental portfolios, it can be significant.
What to declare in Germany
German residents with Spanish property must declare it in their German annual tax return (Einkommensteuererklärung) using Anlage AUS (for foreign income). You declare the amount and state that it is exempt under the DTA but subject to Progressionsvorbehalt.
You will need your Modelo 210 receipt and the underlying calculations to complete Anlage AUS.
Your German Steuerberater and Spanish gestoría should coordinate
The most efficient setup: your Spanish gestoría calculates and files Modelo 210; they provide you with a summary of figures which you pass to your German Steuerberater for Anlage AUS. This avoids double-handling of the same numbers.
German inheritance and the DTA
The Germany–Spain DTA does not cover inheritance tax — each country applies its own rules independently. Spanish inheritance tax on Mallorca property is covered by Spanish Balearic law (see Balearics Inheritance Tax guide), and German inheritance tax (Erbschaftsteuer) may also apply depending on the heirs' residency.
Professional help
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