The reason is quite simple, rental income in Germany is (depending on the sturcture) extempted from trade tax. Therefore the average tax burden in Germany amounts to “only” 13,7% of gross annual rental income. One has to differ between real estate trader/trading and asset management companies.
Pure management of own real estate assets (“Verwaltung eigenen Vermögens”) is extempted from trade tax because its not seen as a commercial operation (“nicht gewerblich”).
Even real estate trading tax (6,2% on the sales price) is much lower than the international average (9,5%).
If you incorporate a new company then the subject of business should be asset management (“vermögensverwaltend”), don’t forget to tell the authorities (“Gewerbeamt”) that you started a business. If you write “vermögendsverwaltend” into the application, then the authorities will testify you that you are not a commercial entity.
Tip 1: found a company for each property (assuming its not a flat but a full building like a multi-family-home.
Tip 2: don’t register the company new, especially if you are a foreigner, the banks will give you a hard time to get a company bank account and without a bank account you will not be able to legally install a fresh company. The “trick” is to buy an all ready incorporated fresh company (“Vorratsgesellschaft”) from a specialized service-provider (e.g.: VRB Vorratsgesellschaften GmbH in Berlin) .
More tricks and tips on our free Berlin Real Estate Serviceprovider PDF.