Renting Property in Brazil as a German Tax Resident in 2026: A Complete Guide

Keeping rental properties in Brazil after moving to Germany is a common situation for Brazilians abroad. Renting property supplements their budget, the property increases in value, and often people do not want to part with assets they have built up over the years. The problem is that few taxpayers are aware that this income is taxable in both countries, and that Brazil and Germany no longer have an international agreement to avoid double taxation.

It is common to see situations where clients, unaware of this fact, declare their Brazilian income in Brazil and their German income in Germany, as if the same person were living two separate lives. This creates an irregular scenario, in which someone may pay tax twice on the same income, with risks in both countries, while there are legal mechanisms to reduce this impact. This text is of interest to:

• lives in Germany and receives rental income from properties in Brazil;
• wants to rent a Brazilian property after moving to Germany;
• already receives rent, but does not know if they are declaring it correctly in both countries;
• wants to understand how double taxation works without a treaty between Brazil and Germany;
• You need to organize your tax situation before leaving Brazil.

In this guide, we explain step by step how property rental taxation works in Brazil for those who are not tax residents in Brazil but are tax residents in Germany: what to pay in Brazil, what to declare in Germany, and how to avoid (or at least minimize) double taxation.

To make it easier, let’s use the fictional example of Roberto, a Brazilian who lives in Munich and rents an apartment in Rio de Janeiro.

Property ownership: if I don’t rent property in Brazil, do I still have obligations in Germany?

Before discussing rentals, it is worth clarifying a point that raises a lot of questions: simply owning a property in Brazil does not create any tax obligations in Germany.

It is not necessary to register this property with German public authorities or to declare it on your income tax return, as there is no wealth tax in Germany and German tax returns do not require the listing of real estate abroad — unlike in Brazil, where the annual tax return includes a section on “Assets and Rights.”

For example, these properties will not be subject to Grundsteuer—a German tax equivalent to IPTU or ITR—or Grunderwerbsteuer, similar to ITBI, as these taxes only apply to properties located in Germany.

Tax obligations in Germany only arise once the real estate—whether inside or outside Germany—begins to generate income. — generates income, in which case it will be necessary not only to declare the income for tax purposes, but also to provide some information about the real estate itself — because, as a tax resident in Germany, you are subject to worldwide income taxation (Welteinkommensprinzip).

What about the sale of real estate? Capital gains from the sale of real estate in Brazil follow different rules, both in Brazil and in Germany. This topic will be the subject of a separate article. Here, we deal exclusively with rental income.

Taxation in Brazil: 15% withholding tax for those who are in Germany and receive rental income from real estate as non-residents

The rule for non-residents who receive rental income from real estate in Brazil

When I live abroad and receive rent in Brazil, taxation occurs through Withholding Income Tax (IRRF), with a fixed rate of 15%See¹ RIR/2018, art. 763; Decree-Law No. 5,844/1943, art. 100; and Law No. 9,249/1995, art. 28.

Two key points distinguish this taxation from that which applies to residents of Brazil:

The tax rate is fixed, not progressive. Residents in Brazil pay income tax on rental income according to a progressive scale (from exempt to 27.5%). Non-residents pay 15% from the first real, with no exemption bracket.

Furthermore, taxation is definitive. Non-residents do not file annual adjustment returns in Brazil. Withholding tax ends the Brazilian tax obligation.

Calculation basis: what can be deducted from property rentals in Brazil

The good news is that the 15% does not apply to gross rent. The IRRF calculation basis is the net amount, after the legally permitted deductions ²(see RIR/2018, art. 42; Law No. 7,739/1989, art. 14; RFB Normative Instruction No. 1,500/2014, arts. 30-35), which are:

• Property tax and municipal taxes levied on the property (or ITR, in the case of rural property);
• Condominium fees paid by the owner;
• Administrator or real estate commission; and
• Other expenses for collecting income;

A simple example serves as an illustration:

In the example above, therefore, the net amount is R$ 3,900.00 per month (gross rent minus condominium fees, property tax, commission, and withholding income tax). Of this amount, R$ 585.00 goes to the Brazilian tax authorities (15%), leaving R$ 3,315.00.

Who collects Brazilian tax on property rentals: the tax attorney

In Brazil, the collection of income tax on non-resident rentals requires the appointment of a tax attorney—an individual or legal entity residing in the country—who will be responsible for fulfilling all tax obligations on their behalf.

The flow envisaged by Brazilian law works as follows:

1. The tenant pays the rent to the property manager (or directly to the attorney);
2. The attorney (or the administrator acting as attorney) withholds the 15% IRRF;
3. The tax attorney collects the amount of the DARF form under his own CPF or CNPJ and remits the net amount to the owner abroad.

In practice, we know that it is different, especially with the existence of Internet Banking and PIX.

Under the Internal Revenue Service programs, taxpayers can collect and declare taxes on their own, without a representative, but there is no express legal provision for this. Legally, I understand that if the taxpayer fulfills their obligation, there is no reason to hold a third party liable. But in practice, we encounter difficulties, especially when we need to request a correction of the DARF form from the Internal Revenue Service, for example.

Another point that always causes confusion: it is a mistake to apply the Carnê-Leão rules (mandatory monthly payment for residents who receive rent from individuals) to non-residents. Carnê-Leão is a mechanism exclusively for tax residents in Brazil (code 0190 on the DARF form). For non-residents, taxation is exclusively at source, at 15%, with code 9478 (“Income from Rent and Royalties paid to Individuals Resident Abroad”).

Another point is that payment must be made on the rent payment date—not the following month, as is the case with residents’ Carnê-Leão. This is a critical compliance issue. If the tax attorney leaves the DARF payment for the next day, there is already a fine and there may be interest on arrears to pay.

Additional obligations when renting properties located in Brazil

In addition to submitting the DARF form, declaring rent on a non-resident’s income tax return follows a completely different procedure. The tax attorney must comply with ancillary obligations:

• EFD-Reinf (event R-4020): mandatory since September 2023 for withholdings to non-residents, with delivery by the 15th of the following month;
• DCTFWeb: mandatory since June 2025 for withholdings to non-residents, with delivery by the last business day of the following month;

It is also important to keep documentation proving withholding and payment, as taxpayers will need these receipts for their tax returns in Germany.

Taxation in Germany on rental income from properties located in Brazil

Why does Germany tax rental income from real estate in Brazil?

Anyone who has a domicile (Wohnsitz) or habitual residence (gewöhnlicher Aufenthalt) in Germany is considered a tax resident in Germany and is therefore subject to unlimited tax liability (unbeschränkte Steuerpflicht). This means that all worldwide income is taxed in Germany—including rental income from properties located in Brazil.

In relations between Brazil and Germany, the two countries had an agreement to avoid double taxation that worked for three decades. However, Germany formally denounced it in 2005, and because of this, we have been without this protection for 20 years.

In the absence of an agreement, both countries tax the same rental income from real estate. Brazil taxes at source, because the property is located here, and Germany taxes the same income as the taxpayer’s country of tax residence.

In general, as detailed below, Germany allows income tax paid in Brazil to be used as a credit to offset German income tax (Einkommensteuer).

How net rental income from real estate is calculated in Germany

This is a point that surprises many taxpayers: net income for German purposes is calculated according to German rules, which differ from Brazilian rules. This may result in a different amount than that calculated in Brazil.

Income from renting property in Brazil is classified as rental and leasing income (Einkünfte aus Vermietung und Verpachtung) ³See § 21 Abs. 1 S. 1 Nr. 1 Einkommensteuergesetz (EStG). This is the same classification given to a rented property in Germany—the foreign origin does not change the category.

Let’s break down the concepts point by point.

Revenue (Einnahmen) from property rentals

Revenues include monthly rent (Kaltmiete) and any charges passed on by the tenant (Nebenkosten), converted into euros. This is similar to the Brazilian rule: in both Brazil and Germany, fines and contractual interest paid by the tenant to the landlord are also treated as rental income.

Deductible expenses (Werbungskosten) for property rentals

Expenses directly related to generating rental income are deductible expenses (Werbungskosten) ⁴(see § 9 Abs. 1 EStG). For properties abroad, the same deduction categories apply as for properties in Germany:

Please note: Brazilian IRRF is not deducted as Werbungskosten. It is subject to credit (or, alternatively, special deduction), a different mechanism explained below.

Depreciation of real estate (AfA): the German deduction that makes a difference

Depreciation (Absetzung für Abnutzung, or AfA) is the most relevant deductible expense for real estate, and does not exist in Brazil for individuals, only in Germany. Even for real estate abroad, taxpayers in Germany can depreciate the building ⁵(see § 7 Abs. 4 EStG). Two important details:

1. Only the value of the building (Gebäudeanteil) is depreciable. The land (Grund und Boden) is not depreciable. It is necessary to separate the total value of the acquisition or construction between land and building. In the absence of specification in the contract, the taxpayer may use an appraisal report or the typical local market ratio.
2. The basis is the acquisition value in euros, converted at the exchange rate on the date of purchase of the property, if acquired, or the building completion date, if built by the taxpayer.

This is a point that always causes confusion. When one buys or builds on a property, part of the price is paid for the building (depreciable) and part for the land or ideal fraction of land where the property is located (non-depreciable). Because of this, German rules provide for the breakdown of the acquisition or construction cost into these two “parts.”

This leads to practical problems. The German tax authorities (Finanzamt) provide a tool for breaking down the land and building cost, but it follows local logic, not Brazilian logic. In the case of Brazilian real estate, this opens up space for making estimates that can be justified by other means.

For the portion of the cost relating to the building, the rate of depreciation expense deductible each year depends on the building completion date, not the date of acquisition by the taxpayer:

The vast majority of Brazilian properties fall under the 2% per annum tax rate (built between 1925 and 2022). Thus, if the building portion of the acquisition cost of Brazilian real estate concluded between 1925 and 2022 was EUR 100,000, then it is possible to deduct EUR 2,000/year from the rental income when calculating German tax (2% of EUR 100,000 each year).

This depreciation reduces taxable income in Germany every year—it is a significant benefit that many taxpayers are unaware of.

Currency conversion from Brazilian reais to euros

The conversion of income and expenses into foreign currency (i.e., from Brazilian reais to euros) follows rules that are not well regulated in Germany, unlike in Brazil. In this regard, it is possible to debate whether the exchange rate on the day of payment or receipt should be used, or the average exchange rate for the month or year.

This ends up being an important element for compliance, as the volatility of the real can generate significant differences from one month to the next. Taxpayers must keep documentation of the exchange rates used and adopt a consistent procedure in their German tax returns that can be justified to the Finanzamt.

Tax rates in Germany: progressive scale for property rentals

Rental income is included in the calculation basis for income tax along with other income (salary, pension, etc.) and is taxed according to the progressive scale⁶See § 32a EStG.

Income tax may also be subject to the Solidaritätszuschlag, or “Soli,” which is an additional 5.5% on income tax that is gradually being phased out, and today most taxpayers are exempt, and the Kirchensteuer, applicable only to members of certain specific churches.

The key point is that Brazilian rental income is added to German income and taxed at the taxpayer’s marginal rate. For most taxpayers in Germany, rental income from Brazil will likely be taxed at a much higher rate than the 15% paid in Brazil, so that Brazilian tax tends to be lower than German tax.

How to take advantage of taxes paid in Brazil in Germany

In the absence of a Brazil-Germany agreement to avoid double taxation, German law allows taxpayers two options for utilizing income tax paid in Brazil⁷See § 34c Abs. 1-2 EStG.:

• treat Brazilian withholding tax as a credit against German tax (Anrechnung), up to a certain limit; or
• treat Brazilian IRRF as a deductible expense (Abzug), reducing the calculation basis.

In practice, the first option, adopting Brazilian IRRF as a credit, will be the most advantageous in most cases. There is a maximum limit for using the credit (Anrechnungshöchstbetrag), corresponding to the amount of German tax on foreign income.

For most taxpayers with income in Germany, the credit works well: as the German tax rate is higher than the Brazilian 15%, the credit limit tends to be higher than the IRRF paid. Result: the 15% paid in Brazil is fully recovered in Germany. But if the opposite situation occurs, the excess is lost, without being used in subsequent years.

The second option may be the best one precisely in situations where income tax in Germany is higher than in Brazil, or if the calculation of net rental income has resulted in a loss. In this case, using Brazilian IRRF as an expense increases the loss, which can be used to offset future earnings from the same activity. This situation tends to be occasional (when there is tenant eviction, minor property renovations, legal action, etc.).

The choice between credit and deduction must be made uniformly for all income and taxes from the same country in the same year. It is not possible to opt for credit for one category of Brazilian income and deduction for another. However, the option can be changed with each annual return.

Complete practical example: rental income from real estate in Brazil received by Roberto, a tax resident in Germany

To illustrate all the rules described above, let’s create a hypothetical case involving Roberto, a Brazilian who lives in Munich and owns a rented apartment in Rio de Janeiro. Roberto originally purchased the property in 2018 for R$ 600,000, when the exchange rate was approximately R$ 4.30 per euro (EUR 139,500). Let’s assume that 70% of this cost corresponds to the building (EUR 97,650). Roberto receives a gross rent of R$ 5,000 per month, with expenses that will be detailed throughout our example.

Step 1: Taxation in Brazil on property rentals

Based on the Brazilian calculation example, the information on Roberto’s property rental would be:

Step 2: Conversion to euro

To simplify, let’s use an average annual exchange rate of R$ 6.00 per euro. In this case, the annual result would be as follows:

Step 3: Calculating the net rental income for Germany

Here, the logic changes. Net income in Germany is calculated according to German rules, with deductible expenses (Werbungskosten) of its own:

Note that the German net income (EUR 5,397) is lower than the Brazilian net income (EUR 7,800, equivalent to R$ 46,800), because Germany allows deductions for depreciation (AfA), attorney fees, and insurance—items that Brazil does not consider in the IRRF calculation basis for non-residents.

Step 4: Taxation in Germany

Let’s assume that Roberto has a total taxable income of EUR 70,000 (including his salary and the EUR 5,397 in rent). His marginal tax rate will be around 42%.

The total German tax (tariff income tax) on EUR 70,000 will be approximately EUR 18,200 (illustrative value).

Step 5: Brazilian tax credit and final result

Roberto opts for credit (Anrechnung):

As the Brazilian withholding tax (EUR 1,170) is lower than the credit limit (EUR 1,403), Roberto can credit the tax paid in Brazil in full against the German tax.

In practice, Roberto pays the equivalent of the German marginal tax rate (42%) on net rental income (calculated according to German rules) without considering the income tax paid in Brazil. But the Brazilian tax of 15% is “absorbed” within the total German tax burden. There is no effective double taxation in this example — but this is only because the German tax rate is higher than the Brazilian rate.

Practical aspects of renting property in the German tax return

In practice, many tax offices accept standardized documents (DARF, bank statements) with explanations in German prepared by a tax advisor. For more complex documents, such as rental agreements or powers of attorney, a translation may be required.

Special situations

Short-term rentals (“Airbnb”) vs. long-term rentals

In Brazil, until 2026, there is no difference in IRRF taxation: both long-term and seasonal rentals are taxed at 15% at source, and there is no additional taxation for non-resident individuals.

In Germany, the distinction may be relevant. Long-term rentals are classified as Vermietung und Verpachtung, as described in this article⁸. See § 21 Abs. 1 S. 1 Nr. 1 EStG. Short-term rentals with additional services (cleaning, reception, etc.) can be reclassified as commercial income (gewerbliche Einkünfte)⁹See § 15 EStG., with possible Gewerbesteuer (trade tax) and commercial registration requirements.

If the rental is only for a short period, without hotel services, the scenario we have described is the most likely, even on Airbnb. However, it is a gray area that must be assessed on a case-by-case basis, especially for those who operate with a significant volume of activities.

Loss on rent

When expenses (Werbungskosten) — especially AfA — exceed rental income, taxpayers in Germany may incur a loss. For properties in Germany itself, this loss can be offset against other income (e.g., salary).

For real estate in countries out of the European Union (Drittstaaten), such as Brazil, the rule is different.¹⁰See § 2a Abs. 1 Satz 1 Nr. 6 lit. a EStG.:

• Losses from renting real estate in third countries cannot be offset against other income in Germany;
• They cannot be offset against rental income from other countries;
• They can only be carried forward to future years (Verlustvortrag) to offset positive rental income from the same country (Brazil).

In practice, this means that a Brazilian property with high AfA—which generates an accounting loss in Germany—cannot use this loss to reduce payroll tax. The loss remains “frozen” until there is positive rental income from Brazil in future years.

This is an important restriction for anyone who has a mortgaged property in Brazil and hoped to use the rental loss to pay less tax in Germany. We have already mentioned that in this case it is usually more advisable to use the Brazilian IRRF as a deduction rather than a credit.

Brazilian tax reform (IBS/CBS) and its effect on rents from 2027 onwards

Impact on real estate rentals in Brazil

It is worth mentioning that this comparison of seasonal rentals to accommodation services is only for the purposes of the new taxes (IBS and CBS), and does not in itself mean that the property is being used as a guesthouse or for hotel activities for other purposes (municipal registration, hotel and guesthouse regulations, etc.).

There are significant reductions: 70% for long-term residential rentals and 40% for seasonal rentals. In practice, this means that the IBS and CBS tax burden for short-term rentals (60% of the normal rate) will be double that of long-term residential rentals (30% of the normal rate).

What this means for those living in Germany

For non-residents with property in Brazil, the key point is: IBS and CBS are added to the 15% IRRF. There is no compensation between them. The total tax burden in Brazil tends to increase for those who meet the above criteria—especially for seasonal rentals.

In Germany, IBS and CBS cannot be used as credit like IRRF, because they are not income taxes (they are consumption taxes). However, they can be deducted as Werbungskosten in the German tax return, reducing the net taxable income.

In the example we created for Roberto, with a single apartment rented for R$ 5,000/month (R$ 60,000/year), the renovation criteria do not yet apply to short- or long-term rentals. But it is new legislation, with complementary regulations still pending, which deserves to be monitored in the coming years.

Conclusions

The taxation of property rentals in Brazil by those living in Germany is one of those issues where a lack of planning can be costly—literally. The termination of the treaty between the two countries in 2005, without a new agreement having been signed in more than twenty years, has created a scenario in which taxpayers must navigate two independent tax systems, without the safety net that an agreement to avoid double taxation would offer.

The good news is that, in most cases, effective double taxation can be avoided. The Brazilian IRRF credit in Germany eases the tax burden, provided that the taxpayer files correctly in both countries, keeps proper documentation, and, preferably, has qualified professionals in both jurisdictions.

The points that summarize the scenario:

• In Brazil: 15% withholding income tax at source, fixed rate, collected by tax attorney via DARF 9478;
• In Germany: income taxed according to a progressive scale (up to 45%), with higher deductions than in Brazil — including depreciation (AfA) of real estate;
• Double taxation: mitigated by Brazilian withholding tax credit or deduction; in most cases, Brazilian tax is fully absorbed by German tax;
• Tax Reform: may increase the tax burden in Brazil for those who meet the IBS/CBS criteria, but at first glance it seems that it could be used as a deduction in Germany.

Is it a complex structure? Yes. Unnecessarily complex, in fact—the result of a bilateral relationship that, in tax matters, has been without a treaty for more than two decades. But it is perfectly manageable with the right guidance.

Neste blog você encontrará sempre informações relevantes e atualizadas a respeito do tema, e orientações para evitar problemas com o Fisco e demais autoridades. Fique à vontade para nos relatar sua experiência, compartilhar o conteúdo com outros amigos que necessitem de orientações e entrar em contato conosco através do e-mail [email protected] ou então via WhatsApp. Clique aqui para enviar uma mensagem agora.

Conte comigo!

Referências:

• 1
  RIR/2018, art. 763; Decree-Law No. 5,844/1943, art. 100; and Law No. 9,249/1995, art. 28
• 2
  (see RIR/2018, art. 42; Law No. 7,739/1989, art. 14; RFB Normative Instruction No. 1,500/2014, arts. 30-35)
• 3
  See § 21 Abs. 1 S. 1 Nr. 1 Einkommensteuergesetz (EStG)
• 4
  (see § 9 Abs. 1 EStG)
• 5
  (see § 7 Abs. 4 EStG)
• 6
  See § 32a EStG
• 7
  See § 34c Abs. 1-2 EStG.
• 8
  . See § 21 Abs. 1 S. 1 Nr. 1 EStG
• 9
  See § 15 EStG.
• 10
  See § 2a Abs. 1 Satz 1 Nr. 6 lit. a EStG.