Transcript Solidarity tax

A Look at Germany
Chapter 6
Europe & International Real Estate
Slide 6-1
Geography
Europe & International Real Estate
Slide 6-2
Länder
Europe & International Real Estate
Slide 6-3
Modern State of Germany
 Old cities, towns, villages
 New country—I871
 History entwined with
other European countries
 1945—split East and West
 1990—united
Europe & International Real Estate
Slide 6-4
Logistics Center of Europe
 Major (3rd) economic sector
 60,000 logistic companies , 8%
of workforce and GDP
 Seaports, roads, railways,
freight hubs, inland waterways
North Sea to Black Sea
Europe & International Real Estate
Slide 6-5
 Dismantling socialist
system, fostering
capitalism, democracy
 Privatizing property and
restarting private
enterprise—Treuhand
 Unemployment and
migration
 Solidarity tax
Unified, still
Divided?
 Wall in the mind—Ossi
and Wessi, Ostalgie
Europe & International Real Estate
Slide 6-6
German Economy
Europe & International Real Estate
Slide 6-7
Real Estate Professionals
 No federal or state licensing
 Immobilienverband Deutschland (IVD)
 Merger of Ring Deutscher Makler (RDM) and
Verband Deutscher Makler (VDM)
 Membership requires qualification exam
and proof of professional liability insurance
Europe & International Real Estate
Slide 6-8
Real Estate Transactions
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Once-in-a-lifetime event, extended search
Makler conveys the offer to the seller
Notar prepares purchase contract
Buyer must demonstrate ability to pay
Priority notice in land register
Signing ceremony, funds placed in notar’s account
Notar applies for registration in Grunbuch
Seller receives payment when registration
complete—about 40 days
Europe & International Real Estate
Slide 6-9
 Lowest homeownership rate
in the EU—only 40%
 Post-War housing shortage
 “Once a renter always a
renter”
 Low market turnover
Germany:
Nation of
Renters
 Scarce , expensive land
 High down payments
Europe & International Real Estate
Slide 6-10
 Rental laws favor tenant
 Maximum 3 months’ deposit
 Controls on rent increases
 Landlord pays utilities
 3–9 months notice to remove
a tenant
Germany:
Pro Tenant
 Tenant can refuse if undue
hardship
Europe & International Real Estate
Slide 6-11
Commercial Real Estate
 Five cities contain most Class A space
 Berlin, Hamburg, Düsseldorf, Frankfurt, Munich
 Administrative centers
 Bonn, Münster, and Wiesbaden
 Essen
 Information and technology, healthcare, insurance
companies, corporate headquarters
 East lags behind West, except Berlin
 Risk-averse and conservative investors
Europe & International Real Estate
Slide 6-12
 www.deutschland.de
 www.bundesbank.de
 www.destatis.de
 www.germany-re.com
 www.invest-in-germany.de
 www.german-businessportal.info
Web Sites
 www.dihlc.de
 www.bfai.de
Europe & International Real Estate
Slide 6-13
Judicial System
 No trial by jury
 Courts of Justice
 Federal, Regional, Local
 Criminal, Civil, Family cases
 Specialized Courts
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Administrative
Finance
Labor
Social
Europe & International Real Estate
Slide 6-14
Government
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Basic Law : constitution established 1949
President: head of state
Chancellor: head of government
Bundestag
Bundesrat
State (Länder)
Municipal (Gemeinden)
Europe & International Real Estate
Slide 6-15
Taxes-Taxes-Taxes
 Tax residency: 183+ days over 2 years
 Income tax: nonresident foreigners 25 – 45%
 Solidarity tax: 5.5% surcharge on income tax, paid
by West Germans
 VAT: 19%
 Capital gains tax: none on real estate owned 10+
years
 Rental Income: 25% for non EU citizens
 Television License: €17monthly fee
Europe & International Real Estate
Slide 6-16
Help desk: www.germantaxes.info
Europe & International Real Estate
Slide 6-17
Beyond the
Basics
 Masters of planning
 Values: order, structure,
stability, discipline,
responsibility, punctuality
 Straightforward
 Personal relationship not
needed for business
 Separate business and
personal life
 Great pride in their homes
Europe & International Real Estate
Slide 6-18