Buying in Crete as a German Citizen: The 1966 Treaty, the Ten-Year Rule and German Inheritance Tax
A German passport makes buying and living in Crete simple; the tax is where the two countries meet. How the 1966 Germany–Greece treaty splits the rent and the sale, what is left of the ten-year rule, why German inheritance tax follows the house to Crete, and what changes if you move.
A German passport makes the Cretan side of buying simple: an EU citizen buys, lives and works here without a permit. The real questions are German ones, and the answers are kinder than most buyers expect. A 1966 treaty gives Greece the right to tax both the rent and the sale of a Cretan house, and Germany steps back from both; the ten-year rule survives only as an effect on your rate. German inheritance tax does not step back. Rules as they stood in October 2026, checked against the treaty text, the German statutes, the German missions in Greece, e-EFKA and Greek government and press sources.
I am not a tax adviser or a lawyer, and this is not tax or legal advice. Take advice from a German Steuerberater who handles foreign property, and from a Greek accountant, before you sign, let or move.
A German owner in Crete in one minute. As an EU citizen you need no permit. The Germany–Greece agreement of 18 April 1966 lets Greece tax the income from a Cretan property and the gain on selling it (Art. XIII); Germany exempts both (Art. XVII). Rent from property in an EU state does not even count towards your German rate (§32b EStG), so the Greek tax — 15% up to €12,000, 25% up to €24,000 in 2026 — is the only tax on it. A sale within ten years (§23 EStG) is exempt but raises the rate on your other income. German inheritance tax covers the whole estate when the deceased, donor or heir lives in Germany, and for five years after a German national leaves (§2 ErbStG), with Greek tax credited (§21). A flat-rate move can bring §2 AStG into play for ten years.
The Cretan side is the EU side
Buying takes the same paperwork as for any foreign buyer: a Greek tax number (AFM), a bank account, a lawyer and a notary. The German missions in Greece remind citizens staying longer than three months to report to the aliens police; the rest is in moving to Crete as an EU citizen.
None of that decides where you pay tax. Keep a flat in Hamburg and winter in Chania, and both countries may claim you; the treaty’s tie-breaker (Article II) then decides by permanent home, closer ties, habitual abode and, last, nationality.
The 1966 treaty: Greece taxes the house, Germany steps back
The agreement of 18 April 1966 (BGBl. 1967 II S. 853) still governs income between the two countries, applying to tax years from 1964. Article XIII(1) lets the state where immovable property lies tax the income from it, and Article XIII(3) extends that to gains from its sale. Article XVII(2) tells Germany to leave such Greek income out of the German tax base, while keeping the right to use it in setting the rate on everything else.
For rent, German law removes even the rate effect. Section 32b EStG applies progression to treaty-exempt income, but excludes rent from immovable property located outside a Drittstaat, and §2a(2a) defines Drittstaaten as the states outside the EU. Greece is inside. Your Cretan rent is taxed in Greece and nowhere else: under the 2026 Greek scale, 15% up to €12,000, 25% up to €24,000, 35% up to €35,000 and 45% above. The short-let rules are in renting out your Crete home.
Selling: what is left of the ten-year rule
At home, §23 EStG taxes the sale of property within ten years of buying it, unless you used it exclusively as your own home for the whole period, or in the year of sale and the two years before. For a Cretan house the treaty changes the result: Greece may tax the gain under Article XIII(3), so Germany exempts it. What survives is the rate. A gain made inside the ten years still counts for progression, because §32b’s exception covers rent, not sales, so it can raise the German tax on your salary or pension that year. After ten years the gain is not income under German law at all.
The Greek side is a date. Greece’s 15% tax on property gains by individuals, article 41 of the Income Tax Code, is suspended until 31 December 2026 by article 90 of law 5162/2024; a bill reported on 24 October 2026 would extend it to the end of 2027, so check whether it has passed before you time a sale around it. On the treaty’s wording, Germany exempts what Greece may tax, not what it collects; have your Steuerberater confirm no special rule applies to you. The seller’s paperwork is in selling a property in Crete.
Inheritance and gifts: Germany keeps its reach
German inheritance and gift tax looks at people, not at where the house stands. Under §2 ErbStG the whole acquisition is taxable when the deceased or donor, or the heir or recipient, is an Inländer: someone with a home or habitual abode in Germany, or a German national in the first five years abroad without a German home. A Cretan house left by a German resident, or to a child living in Munich, is inside German tax.
Greece taxes the house too, under the bands in inheritance, gifts and wills for a Crete home. Germany’s relief is unilateral: §21 ErbStG credits the Greek tax, on application, up to the German tax attributable to the house, if the German tax arises within five years of the Greek. Because the credit is capped, the higher of the two taxes sets the total. The German allowances are €500,000 for a spouse, €400,000 per child and €200,000 per grandchild (§16). Who inherits is separate: under the EU Succession Regulation, the German missions note, the law of your last habitual residence applies unless your will chooses your national law.
Moving to Crete: your pension and the ten-year shadow
Once Crete is your home, Greece taxes your worldwide income. Under Article XII, pensions and annuities are taxable only in the state of residence, except those paid from the public funds of the Federal Republic, its Länder or local authorities, which stay taxable only in Germany: a civil-service pension keeps a German tax bill. The article does not name the statutory pension; ask the Finanzamt Neubrandenburg, the office for people abroad whose only German income is a pension (Rente), in writing. Greece’s regimes for newcomers are in tax residency and the 183 days.
Then the German trap. Section 2 AStG keeps a German national who was unlimited-taxable for five of the last ten years in extended limited tax liability for ten years after leaving, if they move to a low-tax territory, including one where a preferential regime can significantly cut the tax, and keep substantial economic interests in Germany. It bites in years when the income caught exceeds €16,500. A flat-rate regime for newcomers is the kind of preferential taxation it names: ask before electing one.
On visits, the free EHIC from your health insurer covers care that cannot wait, on local terms, but not private care or repatriation. After a move, a pensioner registers for Greek care with the S1, which e-EFKA describes as issued by the state that insures you; see healthcare in Crete for residents.
The honest downside
Letting the house means two tax administrations every year, and German returns that must account for exempt Greek income wherever it affects the rate. Inheritance is the heavy part: two taxes on one house, a capped and time-limited credit, and a German reach that lasts five years after you leave. And the Greek regime most attractive to a German pensioner is the kind of preferential taxation §2 AStG names.
Disclosure: Honest Crete does not sell or list property. Enquiries sent from this section go to a licensed estate agent, not to us; the full statement is below. Nothing in this article names a developer, a property, a lawyer, a Steuerberater, an accountant or any other professional; the Finanzamt Neubrandenburg, e-EFKA and the German missions in Greece are named as the public institutions they are.
Worth it if you want a Cretan house for holidays or letting while you live in Germany: the treaty leaves the rent and the sale to Greece, and the rest can be planned. Skip it if your plan is to move under a flat-rate regime without first asking a German adviser about §2 AStG and the five-year inheritance-tax tail.
Can a German citizen buy property in Crete?
Yes. A German citizen buys in Crete with a Greek tax number (AFM) and a Greek bank account, and as an EU citizen needs no permit to own a home, live or work there. Someone who stays longer than three months registers with the Greek police, as the German missions in Greece point out.
Is rental income from a house in Crete taxed in Germany?
Not for a German resident. Article XIII of the 1966 Germany–Greece treaty lets Greece tax the rent and Article XVII exempts it in Germany; because the house is in an EU state, §32b(1) sentence 2 no. 3 EStG also keeps the rent from raising the German tax rate. The rent is taxed in Greece only, at 15% up to €12,000 and 25% up to €24,000 under the 2026 scale.
Does the German ten-year rule apply when I sell a house in Greece?
Only through the tax rate. The 1966 treaty lets Greece tax the gain on a Cretan sale and Germany exempts it, but a gain made within ten years of buying, unless the own-use exception in §23 EStG applies, counts as exempt income for progression and can raise the German tax on your other income that year. After ten years the sale has no German tax effect.
Do I pay German inheritance tax on a house in Crete?
Yes, if the deceased or the heir lives in Germany, or if the deceased was a German national who had left Germany no more than five years earlier, under §2 ErbStG. Greek inheritance tax on the house is credited against the German tax under §21 ErbStG, up to the German tax attributable to the house. The German allowances are €400,000 per child and €500,000 for a spouse.
Who taxes my German pension if I move to Crete?
Under Article XII of the 1966 treaty, pensions and annuities are taxed only in the country where you live, except pensions paid from German public funds, such as a civil-service pension, which stay taxable only in Germany. The article does not mention the statutory pension separately, so ask the Finanzamt Neubrandenburg, the tax office for German pensioners abroad, before you move.
Can Greece's flat-rate regimes for newcomers cause German tax problems?
Possibly. Section 2 AStG extends German tax liability for ten years for a German national who moves to a territory with low or preferential taxation and keeps substantial economic interests in Germany, in years when the income concerned exceeds €16,500. A flat-rate regime for people moving to Greece is the kind of preferential taxation the provision describes, so take German advice before electing one.
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