Legal News and Guides

Short answer: In suitable cases, Israeli citizens may apply in Germany for an appropriate residence title within 90 days, subject to a lawful route and its applicable conditions.

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Direct answer: German investors commonly choose between direct personal ownership, a transparent partnership, a GmbH & Co. KG, a GmbH and a holding structure. A partnership does not automatically reduce tax. Its advantages can include transparent allocation of profits, flexible financing and succession arrangements, possible trade-tax relief for individual partners and, for qualifying property businesses, the extended trade-tax reduction. A GmbH can retain profits at corporate rates, while a holding can be efficient for qualifying dividends and share disposals. The correct result depends on the activity, municipality, financing, planned distributions, exit and the investor’s country of residence.

Last reviewed: 23 July 2026. General information only. German and Israeli tax advice is required before implementing or changing a structure.

1. The main structures at a glance

2. Transparent partnerships: what “transparent” really means

Under section 15(1) no. 2 EStG, the partners of an OHG, KG or comparable co-entrepreneurship are taxed on their share of business profit and on certain special remuneration, such as payments for management, loans or assets provided to the partnership. The partnership calculates the common profit, but income tax is assessed at partner level. This means a partner can owe tax even when the partnership retains the cash.

Partnerships are attractive when investors need tailored voting, profit-sharing, funding or succession provisions. Tax allocations must nevertheless follow the partnership agreement and economic substance. Losses allocated to a limited partner are subject to section 15a EStG and cannot simply be used without regard to the partner’s capital and liability position.

3. How a GmbH & Co. KG works

A KG must have at least one general partner and one limited partner. In a GmbH & Co. KG, a GmbH is the general partner. Because creditors normally have recourse only to the GmbH’s assets for that general-partner liability, the structure combines KG-style governance with corporate liability protection. The investors usually participate as limited partners and may also own the general-partner GmbH.

The structure is often used for family businesses, project investments and real estate. It can facilitate different capital accounts, financing instruments, voting rights and succession rules. For income-tax purposes it normally remains a partnership. A corporately controlled GmbH & Co. KG is generally commercially characterised under section 15(3) no. 2 EStG and is therefore normally within trade tax, even if its underlying activity would otherwise be asset management.

4. Where a partnership may improve the tax result

• Trade-tax credit: individual partners may receive the section 35 EStG credit against German income tax for allocated trade tax, within statutory limits. The result depends heavily on the municipal multiplier and the partner’s personal tax position.
• Property businesses: a business that exclusively manages and uses its own real estate may apply for the extended reduction under section 9 no. 1 GewStG. The conditions are strict; services, short-term trading, operating assets or other activities can jeopardise it.
• Financing and special business assets: partner loans or property made available to the partnership can be integrated into the overall tax calculation. This creates planning flexibility but also special-business-income and hidden-reserve risks.
• Succession and investor entry: partnership interests and separate capital accounts can make staged transfers easier. Gift, inheritance, real-estate-transfer and valuation rules still require separate analysis.
• Corporate-tax option: eligible partnerships may apply under section 1a KStG to be treated like a corporation for income-tax purposes. The election and any later reversal can trigger transformation-tax consequences and should not be made solely because the headline rate looks lower.

5. GmbH taxation and retention of profits

A GmbH is a separate taxpayer and its liability is generally limited to company assets. In 2026 the corporation-tax rate is 15%, plus solidarity surcharge and municipal trade tax. The federal finance ministry states that the corporation-tax rate is scheduled to fall by one percentage point annually from 2028 until it reaches 10% in 2032. The combined effective burden therefore varies by municipality and deductions.

A GmbH can be useful when profits will remain in the business for reinvestment. If profits are distributed to an individual shareholder, a second shareholder-level tax normally arises. Comparing only the 15% corporation-tax rate with an individual rate is therefore misleading.

6. Holding structures

A holding GmbH owns shares in one or more subsidiaries. Section 8b KStG can largely exclude qualifying dividends and gains from selling corporate shares from the holding’s taxable income, with a statutory portion treated as non-deductible expenses and additional conditions for dividends and trade tax. The principal commercial benefit is often the ability to reinvest sale proceeds inside the corporate group while separating operating risks.

A holding does not shelter the operating company’s ordinary business profit, and it does not by itself remove tax on rental income. Management fees, financing, substance, transfer pricing and anti-abuse provisions must reflect real functions.

7. Real-estate investors: direct ownership, partnership or company?

Private direct ownership may preserve rules that do not apply to a corporation, including the potential treatment of a disposal after the private statutory holding period. A property company may instead support pooled investment, liability separation and long-term reinvestment. A property-owning partnership can be useful for flexible participation, but a GmbH & Co. KG is often commercially characterised and must satisfy the strict extended-reduction conditions if trade-tax relief is expected.

Share transactions are not a simple route around real-estate transfer tax. Section 1 GrEStG contains 90% thresholds and ten-year monitoring periods for changes in the ownership of property-holding partnerships and corporations. Transfers, reorganisations and new investors should be reviewed before signing.

8. Israeli investors: additional questions

• Where is the investor tax-resident, and how does Israel classify the German entity?
• Does the Germany–Israel tax treaty allocate taxing rights or provide a credit?
• Will management from Israel create residence, permanent-establishment or transfer-pricing issues?
• Are German withholding taxes, Israeli reporting, controlled-foreign-company rules or exit taxes relevant?
• Is the intended return current cash distribution, long-term reinvestment or a sale?

The most tax-efficient structure is therefore not a standard product. It is a modelling exercise: calculate acquisition, annual operation, financing, distributions and exit under each realistic structure, then compare administration, liability and succession as well as tax.

Official legal references

• 📖 EStG §15

  Section 15 of the German Income Tax Act (EStG) defines income from a trade or business (Gewerbebetrieb) and how it is classified for tax — central for individuals and partnerships operating in Germany.↗ View the official source
  and
  📖 §35

  Section 35 EStG allows part of the local trade tax (Gewerbesteuer) to be credited against an individual’s income tax, easing double taxation for sole traders and partnerships.↗ View the official source
• 📖 KStG §1a

  Section 1a of the German Corporate Income Tax Act (KStG) lets certain partnerships elect to be taxed like a corporation, applying the corporate tax regime instead of partner-level taxation.↗ View the official source
  and
  📖 §8b

  Section 8b KStG largely exempts dividends and capital gains a company earns from holdings in other companies (about 95% exempt) — a key building block of German holding-company structures.↗ View the official source
• 📖 GewStG §9

  Section 9 GewStG sets out deductions from the trade-tax base, including the special relief for income from managing and letting real estate (erweiterte Grundstückskürzung).↗ View the official source
• 📖 HGB §161

  Section 161 of the German Commercial Code (HGB) defines the limited partnership (Kommanditgesellschaft, KG), in which at least one partner has unlimited liability and the limited partners are liable only up to their contribution — the basis of the popular GmbH & Co. KG structure.↗ View the official source
  and
  📖 GmbHG §13

  Section 13 of the German Limited Liability Companies Act (GmbHG) establishes that a GmbH is a separate legal entity with its own rights and obligations, and that its liability is generally limited to the company’s assets.↗ View the official source
• 📖 GrEStG §1

  Section 1 of the German Real Estate Transfer Tax Act (GrEStG) defines which transactions trigger real estate transfer tax (Grunderwerbsteuer), including indirect acquisitions through share transfers.↗ View the official source

Real estate and tenancy guide · Germany · Updated 2026 · General information

Germany’s rental market is closely regulated in favor of tenants. An Israeli investor who assumes that rent can be set freely may encounter significant restrictions. Understanding tenant-protection mechanisms is essential to an informed investment decision.

What Is the Mietpreisbremse?

In areas designated as tight housing markets, rent for a new tenant is generally limited to approximately 10% above the local comparative rent (ortsübliche Vergleichsmiete). Charging more than the permitted ceiling may allow the tenant to seek repayment.

Local Rent Index (Mietspiegel)

The local rent index is generally the basis for determining comparative rent. This official municipal document reflects rent ranges according to location, size, year of construction and condition. It is important for both landlords and tenants.

Rent Increases for Existing Tenants

Increases for existing tenants are also restricted. The Kappungsgrenze limits the percentage increase over a specified period, commonly to 15%–20% over three years depending on the area, and a legally sufficient justification is required.

Protection Against Eviction (Kündigungsschutz)

Evicting a tenant in Germany is complex and requires a legally recognized ground, such as the landlord’s own use (Eigenbedarf). Notice periods and judicial review apply, so the process must be planned carefully.

What This Means for Investors

These rules directly affect the realistic rental yield. Before buying, compare the current rent with the applicable index, assess the lawful potential for increases and review the status of existing tenants. These differences can separate a good investment from a mediocre one.

This article provides general information only and is not legal advice. Regulation differs between federal states and cities and changes over time. Each property requires individual advice.

Real estate investment guide · Germany · Updated 2026 · General information

The German market attracts Israeli investors because of economic stability, high rental demand in major cities and financing that has historically been available at attractive rates. Entering the market nevertheless requires understanding rules that differ substantially from those in Israel.

1. Plan the Ownership Structure in Advance

Holding property personally or through a German company (GmbH) affects taxation, liability and future sale options. Changing the structure later can be expensive and complex.

2. Include Ancillary Acquisition Costs

Transfer tax, notary, registration and brokerage costs commonly add 10%–15% to the advertised price. A return calculated only on the advertised price is misleading.

3. Review the Tenancy Position

German tenants have strong protections. An occupied property with low rent is materially different from a vacant property even if the purchase prices are identical.

4. Understand Rent Restrictions

The Mietpreisbremse and local Mietspiegel determine the lawful ceiling for rental income.

5. Arrange Local Financing Carefully

German banks offer financing but require orderly documentation. Financing terms directly affect leveraged returns.

6. Plan the Exit Strategy

A private residential property may generally qualify for a capital-gains tax exemption after a ten-year holding period (Spekulationsfrist), subject to the applicable rules. Timing the sale is part of the return calculation.

7. Use Bilingual, Cross-System Advice

The notarized purchase agreement is signed in German. Assistance that understands both German law and the consequences in Israel can materially reduce risk.

This article provides general information only and is not legal, tax or investment advice or a recommendation to invest. Individual advice is required.

Business formation and business-immigration guide · Germany · Updated 2026 · General information

Germany is Europe’s largest economy and a natural target market for Israeli businesses, but market entry requires dealing with several authorities and making legal choices with long-term consequences. Careful planning at the outset can save substantial time and money.

Choosing a Legal Form

The choice between a sole proprietorship (Einzelunternehmen), partnership, UG or GmbH affects liability, taxation and perception among customers and suppliers. Many substantial activities are conducted through a GmbH.

Business Registration (Gewerbeanmeldung)

Business activity generally requires registration with the local trade office (Gewerbeamt), and in some cases registration in the commercial register (Handelsregister) through a notary. Registration with the tax office (Finanzamt) is also required to obtain tax and VAT numbers.

Bank Account and Required Capital

Formation of a GmbH requires a German bank account and actual deposit of the required capital before final registration. Opening an account for foreign owners may require additional documents and identity verification.

Residence and Work Permits (Visum / Aufenthaltstitel)

Israeli citizens benefit from certain entry arrangements, but long-term work and residence require an appropriate permit, such as a self-employment or entrepreneur permit (selbständige Tätigkeit). The authorities assess the business’s economic viability, so advance preparation is important.

Ongoing Obligations

German-standard accounting, periodic VAT returns and compliance with German employment law when hiring staff are continuing responsibilities that should be planned from the start.

This article provides general information only and is not legal or immigration advice. Immigration and registration rules change and are applied individually. Tailored professional advice is required.

Real estate investment guide · Updated 2026 · General information

Many Israeli investors focus on the apartment price and overlook ancillary acquisition costs, which often determine whether an investment is viable. In Germany, and particularly Berlin, these costs consist of several components that should be budgeted before signing before a notary.

Real Estate Transfer Tax (Grunderwerbsteuer)

The rate is set by each federal state (Bundesland) and therefore varies by location. In Berlin it was approximately 6% of the transaction value as of the date written. Confirm the current rate because it may change. This is generally the largest ancillary cost.

Notary and Land-Register Fees (Notar & Grundbuch)

A German real estate transaction must be notarized, and ownership is recorded in the land register. Notary and registration fees generally amount to approximately 1.5%–2% of the transaction value under statutory fee schedules.

Broker’s Commission (Maklerprovision)

Following a legal reform, the commission is generally divided between buyer and seller. The buyer’s share is commonly between 3% and 3.57% including VAT, but this depends on the agreement and location.

Ongoing Tax Considerations

In addition to acquisition costs, plan for taxation of rental income, the ownership structure—personal ownership or a German holding company—and capital-gains tax on sale. A privately held residential property may qualify for a German capital-gains tax exemption after a ten-year holding period (Spekulationsfrist), subject to the applicable conditions.

Checks Before Signing

Review the property’s legal status in the land register, existing tenant rights and the condominium declaration (Teilungserklärung). Legal assistance at this stage can prevent costly mistakes.

This article provides general information only and is not legal or tax advice. Tax rates and costs may change. Individual advice is required.

Tax and e-commerce guide · Updated 2026 · General information

E-commerce gives Israeli businesses access to the large German and EU markets, but it also brings VAT obligations that many businesses discover too late. The rules differ substantially from Israel’s, and mistakes may result in penalties and retroactive assessments.

When German VAT Registration Is Required

Registration may be required when inventory is held in Germany, for example through Fulfillment by Amazon (FBA), or when the applicable annual threshold for intra-EU distance sales is exceeded. Holding goods in a German warehouse almost always requires local registration.

One-Stop Shop (OSS)

The EU One-Stop Shop allows centralized reporting in one member state for qualifying distance sales to EU consumers rather than separate registration in every destination country. A seller holding physical inventory in Germany will generally still need local German VAT registration in addition.

Invoices, VAT Numbers and Reverse Charge

Correct use of an EU VAT number (USt-IdNr) is essential, particularly for business-to-business transactions that may be subject to the reverse-charge mechanism. Compliant German invoices are required to deduct input VAT and avoid audit problems.

Risks of Non-Compliance

Platforms such as Amazon must verify sellers’ VAT status and may freeze non-compliant accounts. The German tax authority (Finanzamt) may also demand retroactive payment plus interest.

Recommended Steps

Map where inventory is held and the countries to which products are sold, assess the need for local registration alongside OSS, and obtain advance tax and legal assistance familiar with both Israeli and German rules.

This article provides general information only and is not legal or tax advice. VAT rules are complex and change. Individual advice based on the business’s specific circumstances is required.

Legal guide · Israel · Updated 2026 · General information

Social media has made public communication available to everyone and increased the number of cases in which a single publication harms the reputation of a person or business. The central legal question is when a publication crosses the line from legitimate criticism to prohibited defamation.

What Is Defamation?

The Defamation Prohibition Law covers a publication that may humiliate or degrade a person or harm the person’s office, business or profession. A publication need not necessarily be false for liability to arise, although truth is a central defense.

Main Defenses

The law recognizes several defenses, including truth in publication when the content is true and serves a public interest, and good faith, such as a fair opinion about public conduct. Distinguishing fact from opinion can be decisive.

Available Remedies

A person harmed by defamation may claim monetary compensation. The law also provides, up to a statutory ceiling, compensation without proof of damage for each publication, and in some cases enhanced compensation where there was intent to harm. Removal and publication of a correction or apology may also be sought in appropriate cases.

Documentation Is Critical

Because online publications are easily deleted or edited, immediate documentation by screenshots showing the date, publication address and publisher’s identity is an essential first step before obtaining legal advice.

When to Consult a Lawyer

When a publication causes real harm to reputation or business, the potential claim should be assessed promptly, both because of limitation issues and to consider a demand letter that may secure rapid removal without full proceedings.

This article provides general information only and is not legal advice. Every matter depends on its facts. Obtain individual advice before taking action.