Top 3 Money Transfer Providers for UK to Germany

Thanks to European Union (EU) free circulation policies, German and British citizens wishing to relocate to the other county, whether for work or retirement can do so freely without the need for a resident or a work permit. However they must have a valid passport.

Germany has become an increasingly popular destination for UK retirees, with some 39,000 retirees settling there as of 2012 according to the UK’s Department of Work and Pensions and the Institute of Public Policy Research. This makes Germany the eighth most popular overseas retirement destination by numbers; as a proportion of retirees to total UK residents there, however, Germany is number one, with retirees accounting from around 40% of the total. The UK state pension can be paid to expats in Germany, but the EU has ruled that the UK is not obliged to adjust pension payments in line with inflation. You can then make a regular money transfer to Germany from your UK account into a German bank account to support your retirement.

Germany has one of the lowest rates of home ownership in the developed world, estimated by the government at 43% in 2013. There are several policy and historical reasons for this, but UK expats moving to Germany may still prefer to buy their home rather than rent. Foreign nationals are freely able to buy property in Germany, but while foreign nationals are able to secure domestic mortgages, funding is normally capped at around 60% of the purchase price. As such, it will be necessary to transfer money to Germany for a deposit, if it has not been built up locally.

The process of buying property in Germany is not vastly different from that in the UK, although, like in the rest of Europe, a notary (Notar) is needed to check the title deeds and oversee the signing of the contract. Estate agents (Makler) charge a commission of 3-7% of the total purchase price, which is agreed in advance, and can be paid by the buyer, the seller or both. The Notar will also usually receive the funds from the buyer on behalf of the seller, who will then receive them once the transfer of ownership has been completed by the land registry. Total transaction costs can be expected to be in the region of 10-15% of the property value.

Inheritance law and tax work very differently in Germany compared to the UK, so specialist legal and accounting advice should be sought before you send money to Germany to purchase the property. Superficially, it is worth knowing that there is no estate tax in Germany. Rather, inheritance tax (Erbschaftssteuer) is applied to each individual heir or beneficiary and not on the entirety of a German estate. The UK Germany Double taxation Convention ensures that no taxes are paid twice, however. Whether resident or non-resident, it may be advisable to make a will according to German law in the event of purchasing property. If a decendent possesses more than one citizenship at the time of death, German law disregards any non-German citizenship in determining the laws applicable to the estate. There is no capital gains tax on real estate held for longer than 10 years, but will start at 25% if sold within that time.

Germany is the UK’s largest source of imports and supplied goods and services worth £57.4bn (EUR71.8bn) in 2013, 13.8% of total UK imports. This is nearly double the £30.7bn – 10% of the total – that the UK exported to Germany that year. In the first three quarters of 2014, Germany was the source of £42.7bn of goods imports, equivalent to 14.3% of the total. Imports from Germany are dominated by motor vehicles and parts, followed by machinery and chemicals.