Dubai will remain one of the most exciting property markets for German investors in 2026: high yields, modern construction quality and no local income tax. However, while income in the United Arab Emirates remains tax-free, the global income principle applies in Germany - and thus the obligation to pay tax on rental income from Dubai in Germany.
Current legal situation 2026: No more double taxation agreement
Since the expiry of the double taxation agreement (DTA) between Germany and the United Arab Emirates on 31 December 2021, only the German Income Tax Act (EStG) applies.
This means: Whoever takes up residence in 2026 or habitual residence in Germany is subject to unlimited tax liability (§ 1 EStG) - and must thus Worldwide incomeincluding the rental income from Dubai, in Germany, and tax.
As no income tax will be levied on private rental income in Dubai in 2026, the option of offsetting foreign tax in accordance with Section 34c EStG will no longer apply.
In short: Rental income from Dubai is fully taxable in Germany.
How to correctly declare rental income from Dubai in your tax return
For the 2026 tax return, the income from renting out your property Property in Dubai in Annex V ("Income from letting and leasing").
The following information is required:
- Location and type of property in Dubai
- Total rental income
- Deductible income-related expenses (e.g. repairs, administrative costs, interest, depreciation)
- Net income after deduction of costs
As no income tax is payable in Dubai, the AUS annex does not normally need to be completed.
Tip: Keep all receipts and invoices in a safe place. They serve as proof for the tax office and ensure that your costs are recognised for tax purposes.
Deductible costs - how to reduce your tax burden
Even without tax liability in Dubai, you can claim numerous expenses for tax purposes in Germany. These include in particular
Depreciation and amortisation (AfA)
- 3 % per year for new buildings (completion from 2023)
- 2 % per year for buildings constructed between 1925-2022
Depreciation relates exclusively to the building portion - not to the value of the land.
Further advertising costsn
- Administrative costs (e.g. property management, service or management fees)
- Repairs and maintenance (painting work, technical maintenance, modernisation)
- Insurance (building or liability insurance)
- Financing costs (interest and fees for loans)
These items reduce your taxable income and can significantly reduce your tax burden.
Allowances and personal tax liability 2026
The following basic allowances are expected to apply in the 2026 tax year (adjusted for inflation and tax index)
- 12,240 € for single persons
- 24,480 € for married couples (joint assessment)
Income below these limits remains tax-free.
In addition, the progressive tax rates under German income tax law apply - the exact burden depends on the taxpayer's overall income situation.
Sample calculation: This is the effect of the tax liability
A German investor generates rental income of AED 60,000 (approx. € 15,000) from a flat in Dubai in 2026.
After deducting € 3,000 in income-related expenses, the remaining taxable amount is € 12,000.
If this is above the basic tax-free allowance, it is taxed at the personal tax rate in Germany.
As no tax is paid in Dubai, there is no imputation.
Tax structuring and optimisation 2026
- Even without a DTA, investors can benefit from tax advantages by planning ahead:
- Utilise depreciation consistently
- Fully document expense receipts
- Check financing structure (equity vs. loan)
- Involve tax consultants with international expertise
Structured tax planning is particularly worthwhile if you have several properties or mixed types of income (e.g. rent + investment income).
Conclusion: Tax exemption in Dubai does not mean tax exemption in Germany
Dubai offers investors exceptional yield opportunities - but one thing remains clear for German taxpayers:
Rental income from Dubai is fully subject to income tax in Germany.
Those who declare their income correctly and observe the applicable regulations can avoid tax risks and make the most of the advantages of the Dubai market.
Talk to us
Do you already own a property in Dubai or are you planning an investment and would like to know how your rental income is taxed?
The Home-Dubai.de team will support you with sound expertise - from choosing the right property to tax-optimised planning.
Talk to us - we will advise you personally, transparently and confidentially.
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