Retiring to Germany: Retiree Resident Permits

If you are planning to retire in Germany, securing the right residence permit is the most critical step. The process differs depending on whether you hold an EU or non-EU passport: 

• EU Citizens: Due to European freedom of movement, EU citizens can move to Germany without requiring a visa or residence permit. 
• Non-EU Citizens: For those outside the EU, including retirees from the United States, Australia, Canada, and other countries, a residence permit is required to stay in Germany beyond 90 days. Some key points include: 
• Short-Term Stay & Application Process: Many non-EU citizens can enter Germany visa-free for up to 90 days. During this time, they can apply for a residence permit. Alternatively, they can apply through the German consulate or embassy in their home country. 
• Financial Requirements: To be eligible for a German visa, you must prove that you can financially support yourself without relying on German social welfare. Pension income, savings, or other stable financial sources will be assessed. 
• Health Insurance: Germany requires all residents to have adequate health insurance. Proof of either German public health insurance (if eligible) or comprehensive private health coverage is mandatory. 

The standard residence permit for retirees is initially valid for one year and can be renewed. After five years of legal residence in Germany, retirees may qualify for permanent residency and even citizenship, provided they meet integration requirements, including a basic level of German language proficiency. 

At Schlun & Elseven Rechtsanwälte, our lawyers provide expert guidance to clients worldwide who are looking to purchase property in Germany. The German real estate market can be complex, and our team ensures clients avoid common pitfalls that could lead to costly legal complications. From reviewing purchase contracts to advising on construction defects and homeowners’ association regulations, we offer comprehensive support at every stage of the process.

If mishandled, legal disputes can lead to prolonged and expensive conflicts. Buyers can prevent unnecessary delays and unexpected legal issues by securing legal representation from the outset. Our lawyers provide tailored advice on market conditions, the purchasing process, and the best locations to find the ideal property, ensuring a smooth and secure investment in Germany.

When retiring in Germany, understanding the country’s tax system is essential to ensure compliance and avoid unexpected financial burdens. 

Germany follows a worldwide income taxation principle, meaning that retirees who establish tax residency in Germany must declare all sources of income, including pensions from abroad. However, double taxation agreements (DTAs) between Germany and many countries, such as the United States, Canada, and the UK, may prevent the same income from being taxed twice. 

For example, under the Germany-US DTA, US Social Security benefits are typically taxable only in the United States, while German tax authorities do not impose additional taxes on them. It is crucial to check the specific provisions of the DTA that apply to your country of origin. 

Owning property in Germany comes with tax responsibilities. Retirees who purchase a home should be aware of Grundsteuer (property tax), which is levied annually and varies depending on the municipality. If a retiree sells a property, capital gains tax (Spekulationssteuer) may apply unless the property has been held for more than ten years or has been used as a primary residence for at least two years before the sale (Section 23 EStG). 

Germany’s inheritance and gift tax (Erbschafts- und Schenkungssteuer) applies to assets transferred to heirs or given as gifts during one’s lifetime. The tax rate depends on the value of the estate and the relationship between the giver and the recipient. Spouses and children receive significant tax-free allowances, whereas more distant relatives or non-family members may face higher taxation. 

International retirees should consider drafting a German will or specifying the applicable inheritance law under the EU Succession Regulation to ensure their assets are distributed according to their wishes. 

Germany’s inheritance laws (Erbrecht) differ significantly from those in common law countries and can have major implications for retirees with assets in Germany. One key difference is Germany’s forced heirship rules, which grant close family members (such as children and spouses) a mandatory share (Pflichtteil) of the estate, even if they are excluded from a will. This can affect estate distribution plans, particularly for international retirees who wish to structure their inheritance differently. 

For expats retiring in Germany, determining which inheritance law applies is essential. Under the EU Succession Regulation (Regulation (EU) No 650/2012), individuals residing in Germany can choose whether German law or the inheritance law of their country of nationality applies to their estate. However, this choice must be explicitly stated in a legally valid will to be enforceable. Without such a declaration, German inheritance law will typically apply to all assets located in Germany, which may lead to unintended consequences. 

Additionally, the German inheritance tax (Erbschaftsteuer) applies to both residents and non-residents, depending on the location of assets and the beneficiary’s residence. Tax rates range from 7% to 50%, depending on the value of the inheritance and the relationship between the deceased and the heir. Spouses and children benefit from higher tax-free allowances, while more distant relatives and non-family heirs face higher taxation.