Germany and Spain signed a new double taxation agreement in 2011 (CDI España-Alemania, in force from 2013), replacing the earlier 1966 treaty (see BOE full text). For Germans who have moved to Spain — whether retirees on the Costa del Sol, remote workers relocating post-pandemic, or investors holding German real estate — understanding which country can tax each income stream is essential to avoid both double taxation and unexpected surprises.
Establishing Residency: The Tie-Breaker
Both countries may initially claim you as a tax resident: Germany uses worldwide income taxation for residents, and Spain applies the 183-day rule plus the centre of vital interests test. Where both claim residency, the treaty's tie-breaker rule (Article 4) determines residence for treaty purposes:
- Permanent home: The country where you have a permanent home. If only in one country, that country wins.
- Centre of vital interests: If permanent homes in both, the country where your personal and economic relationships are closer.
- Habitual abode: The country where you habitually reside (183-day test applied under the treaty).
- Nationality: If still unresolved, the country of which you are a national.
- Mutual agreement: Final resort — competent authorities agree.
Employment Income (Article 15)
Under Article 15, employment income is taxable in the state where the work is performed. A German employee working remotely from Spain for a German employer is generally taxable in Spain on their salary — not in Germany — even though the employer is German. Germany may still withhold tax under its domestic rules, creating a need to claim the treaty exemption and refund through the German annual assessment.
Short-term work in Germany (fewer than 183 days in a 12-month period, with a German employer and salary charged to a German entity) may be taxable in Germany under the 183-day exception. The interaction with Spanish IRPF creates a need for foreign tax credits.
German Kurzarbeitergeld
German short-time work allowances (Kurzarbeitergeld, Kug) paid by the German Federal Employment Agency (Bundesagentur für Arbeit) to employees are treated as social security benefits. Under the treaty, these are taxable in the state of residence — Spain — not in Germany. Spanish tax residents receiving Kug must declare it on their Spanish IRPF return.
Pensions: The Crucial Private/Public Distinction
German State Pension (Deutsche Rentenversicherung) — Article 18
Pensions paid by the Deutsche Rentenversicherung (the German state social security system) fall under Article 18 of the treaty — private-sector pensions and social security pensions. Under the 2011 treaty, these are taxable exclusively in the state of residence — i.e., Spain, if the pensioner lives in Spain. Germany does not tax the DRV pension of a Spanish resident. The pensioner must declare the DRV pension on their Spanish IRPF return.
German Civil Servant Pension (Beamtenpension) — Article 19
This is the key distinction for many German retirees. Pensions paid by German federal, state (Länder), or local government to former civil servants (Beamte, Richter, Soldaten) are classified under Article 19 — government service pensions. Under this article, the pension is taxable exclusively in Germany, regardless of where the pensioner lives. A retired German teacher or judge who moves to Spain continues to pay German income tax on their Beamtenpension; Spain must exempt that income (though it takes it into account for the progressivity reservation). No Spanish IRPF applies to the Beamtenpension itself.
Practical note for Beamtenpensionäre: You will continue to file a German tax return and pay German tax on your pension. Spain will take the exempt pension into account when determining the applicable rate on your other Spanish income (progressivity reservation — Art. 23). This can push your Spanish marginal rate higher even though the pension itself is exempt.
Dividends from Germany (Article 10)
Where a Spanish resident receives dividends from a German company:
- 5% withholding tax (WHT) in Germany if the recipient holds at least 25% of the company's capital
- 15% WHT in all other cases
- Spain also taxes the dividends as savings income (19–28%), but credits the German WHT against the Spanish tax due under Art. 23
Interest from Germany (Article 11)
Interest paid from Germany to a Spanish resident is subject to a maximum 5% German WHT under the treaty. Spain taxes the interest as savings income and credits the German WHT.
Capital Gains on German Real Estate (Article 13)
Gains on the sale of German real estate by a Spanish resident are taxable in Germany under Article 13(1). Spain must exempt the gain from IRPF (though it takes it into account for the progressivity reservation). The German gain is subject to German Einkommensteuer on the gain (Grunderwerbsteuer paid on purchase is a deductible acquisition cost). If the property was held for more than 10 years, German domestic law generally exempts the gain — the treaty allocation to Germany does not itself create a charge if German domestic law exempts it.
No Treaty Coverage for Inheritance Tax
The Spain-Germany treaty does not cover inheritance and gift tax. Each country applies its own rules independently. A Spanish resident who inherits German assets may face both German Erbschaftsteuer and Spanish ISD — with limited relief mechanisms (some domestic credit provisions may apply, but double taxation on inheritance is a real risk). The interaction of the two inheritance tax systems requires specialist advice.
Riester-Rente and Rürup-Rente in Spain
The Riester-Rente and Rürup-Rente (Basisrente) are German tax-advantaged pension savings schemes. Spain does not recognise contributions to these schemes as tax-deductible under Spanish IRPF. A Spanish resident making contributions to a Riester or Rürup plan receives no Spanish tax relief on the contributions. Distributions from these plans in retirement are treated as pension income in Spain under Article 18 (taxable in Spain) — so contributions are made from after-tax income (for Spanish purposes), and distributions are again taxed in Spain. Professional advice on the German-Spanish pension interaction is important for long-term residents.
| Income Type | Treaty Article | Taxable In (Spanish Resident) | Notes |
|---|---|---|---|
| German salary (work in Spain) | Art. 15 | Spain | German employer may still withhold — treaty claim needed |
| German salary (work in Germany, <183 days) | Art. 15 | Germany (FTC in Spain) | 183-day exception applies |
| Deutsche Rentenversicherung pension | Art. 18 | Spain only | Declare in Spain IRPF |
| Beamtenpension (civil servant) | Art. 19 | Germany only | Germany taxes; Spain exempts but progressivity applies |
| German dividends (<25% stake) | Art. 10 | Both (15% WHT in Germany; savings income in Spain) | FTC for German WHT in Spain |
| German real estate capital gain | Art. 13 | Germany (exempt in Spain) | German domestic exemption may apply if held >10 years |
| German inheritance | No treaty | Both (double taxation risk) | Domestic credit provisions only |
German-Spanish Tax Planning
The Spain-Germany treaty has important nuances — particularly on pensions and inheritance. Jacob Salama provides combined German-Spanish tax analysis for expats and cross-border investors.
Book a Consultation →Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Spanish tax law changes frequently. Always consult a qualified tax lawyer before making any decisions. SALAMA LEGAL SLP — Colegiado nº 11.294 ICAMálaga.