Legal News and Guides

Direct answer: Germany’s Mietpreisbremse mainly limits the rent agreed at the start of a new residential tenancy in areas officially designated as tight housing markets. In Berlin, the rule applies throughout the city from 1 January 2026 through 31 December 2029. As a rule, the starting rent may not exceed the local comparative rent by more than 10%, although prior-rent, recent-modernisation, new-build and comprehensive-modernisation exceptions can change the result. Existing rents follow different rules: a landlord normally needs a justified request, statutory waiting periods and the applicable cap.

Last reviewed: 23 July 2026. General information only; individual contracts and exceptions require case-specific review.

1. What the Mietpreisbremse regulates

Sections 556d–556g of the German Civil Code (BGB) regulate the permissible rent at the beginning of certain residential tenancies. The mechanism is not a nationwide fixed rent. It applies only where a state government has designated a municipality or part of one as a tight housing market.

Where it applies, the starting rent is generally limited to 110% of the local comparative rent (ortsübliche Vergleichsmiete). The relevant benchmark usually comes from the local rent index (Mietspiegel) and depends on factors such as size, location, construction period, condition and equipment.

2. The position in Berlin in 2026

Berlin’s ordinance of 11 November 2025 designates the whole city as a tight housing market from 1 January 2026 until 31 December 2029. The Berlin Mietspiegel 2026 is the current qualified rent index and is an important reference both for new-letting checks and for many increases in existing tenancies.

This is one of the recent legal changes: federal legislation extended the statutory framework for state rent-brake ordinances until the end of 2029, and Berlin adopted a new ordinance for the same period. Berlin also continues to apply a reduced 15% cap for increases to the local comparative rent through 10 May 2028.

3. The principal exceptions at the start of a tenancy

• Higher prior rent: under section 556e BGB, a lawful rent paid by the previous tenant may permit a higher starting rent.
• Recent modernisation: qualifying modernisation during the three years before the tenancy can increase the permissible amount.
• Newly built housing: section 556f BGB excludes housing first used and rented after 1 October 2014.
• First letting after comprehensive modernisation: the rent brake does not apply to that first letting.

If a landlord relies on one of these exceptions, section 556g BGB requires specified information to be given to the tenant before the tenant makes the contractual declaration. A missing or defective disclosure can affect when the landlord may rely on the exception.

4. How often can an existing rent be increased?

5. Formal requirements for an increase to the comparative rent

A request under section 558 BGB must be in text form and justified. Section 558a BGB allows reliance on a rent index, a rent database, an expert report or at least three comparable apartments. If a qualified rent index covers the apartment, the landlord must also communicate the relevant rent-index information even when relying on another method.

The tenant has until the end of the second calendar month following receipt to consider the request. If the tenant agrees, the higher rent is due from the beginning of the third calendar month after receipt. If consent is refused, the landlord may sue for consent within the following statutory period; the increase is not simply created by an unsupported demand.

6. How tenants can challenge an excessive starting rent

1. Identify the correct regime. Check whether the issue concerns the initial rent, an increase under § 558, an index or stepped clause, modernisation or operating costs.
2. Check the local benchmark. Use the official Berlin Mietspiegel 2026 and record the apartment’s size, construction period, location and relevant features.
3. Ask for the legal basis and documents. For a rent-brake exception, request the prior-rent or modernisation information that is not publicly available. For an increase, check the stated calculation and justification.
4. Object in text form where appropriate. Section 556g BGB requires a tenant to complain (Rüge) before recovering rent that was not owed under the rent-brake rules. The timing of the complaint affects how far back repayment can reach.
5. Do not improvise a rent deduction. Continue to protect the tenancy and obtain advice before withholding or offsetting amounts. A mistaken underpayment can create separate risk.
6. Use available assistance. Berlin’s official Mietpreisprüfstelle offers a free initial rent review. Tenant associations and lawyers can assess exceptions, limitation periods and litigation risk.

7. What landlords should do before issuing an increase

Landlords should first classify the intended increase, verify the waiting period and cap, use the current rent index, separate maintenance from modernisation costs and provide every required disclosure in text form. A legally defective demand can delay the increase and create avoidable disputes.

Frequently asked questions

Does the rent brake cap every rent in Berlin?

No. It principally regulates starting rent for covered residential tenancies and contains important exceptions. Existing-rent increases follow different provisions.

Can a Berlin landlord raise rent every year?

Not automatically. For an ordinary increase to the local comparative rent, the statutory timing, justification and cap rules must all be satisfied. Index and stepped-rent clauses follow their own rules.

What is the first step if a tenant believes the rent is too high?

Use the official Mietspiegel, identify any disclosed exception and obtain the information required under section 556g BGB. A timely written complaint may be essential.

Official sources

• BGB § 556g – remedies and information rights
• BGB § 558 – increases to the local comparative rent
• BGB § 558b – consent and timing
• BGB § 559 – modernisation increases
• Berlin 2026 rent-brake ordinance
• Berlin Mietspiegel 2026
• Berlin Mietpreisprüfstelle

Direct answer: CONNY is a German legal-tech business that offers online checks and enforcement services for selected tenant claims, particularly claims under the Mietpreisbremse. According to CONNY’s current website, a tenant enters information about the apartment and tenancy, receives an initial assessment and can then instruct CONNY to pursue a rent reduction. CONNY describes its model as success-based, with partner lawyers handling court proceedings where necessary and considered appropriate.

Last reviewed: 23 July 2026. This independent overview is not an endorsement and has no affiliation with CONNY. Terms, eligibility and fees should be checked directly before instruction.

1. The problem CONNY is designed to address

Germany’s rent-brake rules can allow a tenant to challenge a starting rent that exceeds the statutory limit. The calculation can be difficult because it may depend on the local rent index, apartment characteristics, the previous rent, recent modernisation, new-build status and the landlord’s pre-contract disclosure.

A tenant must also take an active step: section 556g BGB requires a complaint (Rüge) before certain overpayments can be recovered. The date and content of that complaint matter. CONNY has built an online workflow around collecting the relevant facts, estimating a possible reduction and pursuing qualifying claims.

2. How CONNY says its process works

1. Online data entry: the tenant provides the address, rent, contract and apartment details.
2. Initial calculation: the platform estimates whether the agreed rent may exceed the permitted level.
3. Instruction: the tenant decides whether to mandate CONNY. The landlord is not contacted merely because the tenant runs the initial check.
4. Complaint and correspondence: CONNY states that it sends the complaint and handles communication with the landlord.
5. Possible court stage: CONNY states that partner lawyers may bring a claim where an out-of-court solution is not reached and the case is considered suitable.

3. How the fee model is described

CONNY currently advertises a free initial calculation and a success-based fee model. Its website explains that the remuneration is generally funded from claims relating to past overpayments and may, in specified cases, involve a minimum fee linked to a period of future savings. The precise contract terms—not a summary on another website—govern the customer’s obligations.

4. Questions to ask before signing

5. CONNY compared with other routes

• Direct written complaint: a tenant may prepare and send a complaint personally, but must understand the calculation and procedural consequences.
• Berlin Mietpreisprüfstelle: Berlin’s official rent-check office offers free assistance with suspected excessive rent.
• Tenant association: membership may include advice and template letters, subject to the association’s conditions and waiting periods.
• Individual lawyer: suitable where the dispute includes termination, defects, arrears, complex modernisation or strategic issues beyond the rent brake.
• Legal-expenses insurance: coverage depends on the policy, waiting periods and the date the dispute arose.

6. When an automated check is not enough

Legal-tech tools are most useful for structured, repeatable claims. A lawyer should review the wider file where the landlord threatens termination, the apartment has mixed residential/commercial use, the contract is furnished or temporary, the tenant has arrears, the facts around comprehensive modernisation are disputed, or several claims must be coordinated.

Frequently asked questions

Is CONNY a government service?

No. It is a private legal-tech provider. Berlin separately operates an official Mietpreisprüfstelle.

Does the online check itself contact the landlord?

CONNY’s current website states that the landlord is contacted only after the tenant mandates the service.

Is CONNY always the cheapest option?

That cannot be answered generally. Compare the current mandate terms with a tenant association, individual legal advice and any applicable legal-expenses insurance.

Sources

• CONNY’s current rent-brake service page and terms overview
• BGB § 556g
• Berlin Mietpreisprüfstelle

Direct answer: VAT cannot be decided from the customer’s country alone. First identify whether the transaction is goods or services, whether the customer acts as a business (B2B) or a private person (B2C), where the supplier and customer are established, and whether a special place-of-supply rule applies. In many Germany–Israel B2B service cases, the supplier does not add its domestic VAT and the business customer accounts for tax locally under a reverse-charge or imported-services mechanism. Consumer, property, digital-service and goods transactions can produce a different result.

Last reviewed: 23 July 2026. This guide gives decision rules and common examples, not a filing position. VAT treatment must be confirmed against the exact supply, contract, evidence and registration status in both countries.

1. Start with five questions

1. Who is the supplier and where is that business established?
2. Is the customer buying for a business or privately?
3. Is the supply goods, a general service, an electronic service or a service connected with real estate?
4. Where does transport begin and end, or where is the service legally treated as supplied?
5. Who must report the VAT: supplier, customer under reverse charge, importer or marketplace?

2. Common service scenarios

3. Why “B2B” must be proved

A company name on an invoice is not always enough. The service must be acquired for the customer’s business. For EU customers, a valid VAT identification number is important evidence and can be checked through VIES. For an Israeli business customer, suppliers normally retain official registration details, a contract, business address and a statement showing the business purpose.

4. Goods moving from Germany to Israel

• German supplier to an Israeli company: a properly documented export can be exempt from German VAT under §§ 4(1)(a) and 6 UStG. The Israeli importer normally deals with customs and import VAT in Israel.
• German supplier to an Israeli consumer: export relief can also be available when the statutory export and evidence conditions are met. The buyer may face Israeli import VAT and customs/clearance charges.
• No transport out of Germany: if the goods remain in Germany, the export exemption does not apply merely because the buyer is Israeli.

5. Goods moving from Israel to Germany

• Israeli supplier to a German company: the German importer normally pays import VAT. The customs value, Incoterms and identity of the importer of record determine who carries the obligation.
• Israeli supplier to a German consumer: German/EU import VAT is generally due. For consignments with an intrinsic value up to EUR 150, an eligible seller or marketplace may use the Import One Stop Shop (IOSS) and collect VAT at checkout; otherwise the carrier or customs process may collect import VAT.
• Marketplace sales: an online marketplace can be deemed the supplier for specified imported or facilitated sales, changing who collects VAT.

6. Services connected with real estate

Services sufficiently connected with immovable property are generally taxed where the property is located. A German architect’s service for a Berlin property can therefore be German-taxable even if the client lives in Israel. Conversely, the treatment of a service tied directly to Israeli property must be checked under Israeli rules. “The client is abroad” is not a sufficient VAT conclusion.

7. Electronic services and online subscriptions

For B2C telecommunications, broadcasting and electronically supplied services, EU rules generally tax the service where the consumer resides. An Israeli supplier selling automated digital services to German consumers may therefore need to collect German VAT and can consider the EU non-Union OSS. Human professional advice delivered by email or video call is not automatically an “electronic service”; the level of automation matters.

8. The Israeli VAT side cannot be skipped

Israel has its own rules for domestic supplies, imported services and zero-rated services to foreign residents. Zero-rating is not automatic merely because the invoice is sent abroad: the recipient, beneficiary, subject matter and Israeli connection must be examined. A foreign person or company doing business in Israel may need to appoint an Israeli representative and open a VAT file; the Israel Tax Authority provides Form 22 for that process.

9. Invoice checklist

• Legal names, addresses and tax/VAT numbers of both parties.
• Clear description and supply date.
• Evidence of the customer’s business status when B2B treatment is used.
• Correct VAT rate or a precise reason for no VAT.
• Reverse-charge wording where applicable.
• Export and customs evidence for goods.
• Contract terms showing who is importer of record and who bears taxes.

Frequently asked questions

Does a German company always charge German VAT to an Israeli customer?

No. General B2B services and specified professional services to an Israeli private customer are common situations in which German VAT may not be charged, but the exact service and Israeli consequences must be checked.

Does an Israeli company charge German VAT to a German company?

For a general B2B service, the German business customer normally accounts for German VAT under reverse charge. Goods and special services follow different rules.

Does “no VAT on the invoice” mean no VAT is due anywhere?

No. It often means the customer or importer must account for VAT in the destination country.

Official sources

• German UStG § 3a – place of supply of services
• German UStG § 13b – recipient as tax debtor
• German UStG § 6 – export supplies
• European Union – cross-border VAT
• European Union – OSS and IOSS overview
• Israel Tax Authority – VAT registration for a foreign trader

Direct answer: A German real-estate purchase contract must be notarised. The notary is an independent public office-holder who prepares and records the transaction, explains its legal structure, checks the land register, coordinates protections such as the priority notice, obtains required documents, notifies the buyer when payment conditions are satisfied and applies for the transfer of ownership. The notary is neutral—not the buyer’s or seller’s personal advocate—and does not replace technical, tax or commercial due diligence.

Last reviewed: 23 July 2026. General information only. Cross-border representation, tax and financing should be checked for the specific transaction.

1. Why the notary is mandatory

Section 311b(1) BGB requires notarisation of a contract obliging a party to transfer or acquire ownership of German land. Ownership itself passes only through the required agreement and registration in the land register under section 873 BGB. Signing a private purchase agreement is therefore not the normal route to acquiring German real estate.

2. What happens before signing

1. The notary receives the commercial terms. These usually include the parties, property, price, possession date, financing and any items sold with the property.
2. The land register is reviewed. The notary identifies the registered owner and rights such as land charges, easements, usufruct or restrictions.
3. A draft contract is prepared. The draft allocates the parties’ rights and obligations and describes how the deal will be completed.
4. The parties review the draft. In a consumer real-estate transaction, the intended text should normally be supplied by the notary about two weeks before notarisation so the consumer has adequate time to consider it.
5. Open issues are clarified. Financing, deletion of existing security rights, condominium documents, powers of attorney and tax details should be resolved before the appointment.

3. What happens at the appointment

The deed is read aloud, the notary explains the transaction and answers legal questions about the deed. The parties then sign with the notary. A party who does not understand German may require an interpreter; the notary determines the required arrangement.

A person unable to attend may sometimes be represented under a suitable power of attorney or the transaction may be completed through later approval. The formal validity, certification, apostille and wording of a foreign power of attorney should be cleared with the German notary before the appointment.

4. What the notary does after signing

• Applies for a priority notice (Auflassungsvormerkung) to secure the buyer’s contractual position.
• Obtains releases, consents and municipal declarations required for completion.
• Coordinates deletion of seller financing charges that the buyer will not assume.
• Issues the payment-due notice once the contractual safeguards are in place.
• Notifies the tax authorities and other bodies as required.
• After the purchase price and real-estate transfer tax requirements are satisfied, applies for registration of the buyer as owner.

5. What the notary does not normally verify for the buyer

6. Special points for foreign buyers

• Confirm the exact spelling of names and marital status shown in passports.
• Ask early whether a marriage-property regime or foreign company documents must be evidenced.
• Arrange certified translations, interpreter attendance and foreign-document formalities before signing.
• Coordinate the transfer path, banking compliance and source-of-funds documentation.
• Obtain German and home-country tax advice; notarisation does not settle treaty, income-tax or inheritance planning.

7. Practical document checklist

• Passport/ID and current address for every party.
• Property details and land-register reference.
• Financing information and lender documents.
• For an apartment: declaration of division, community rules, meeting minutes, business plans, accounts and reserve information.
• Any lease, property-management contract or furniture inventory.
• Company registers, board approvals and beneficial-owner details for corporate parties.
• Draft power of attorney and apostille plan if a party will not attend.

Frequently asked questions

Does the German notary represent the buyer?

No. The notary is neutral and must treat both sides impartially. Each party may retain independent counsel.

When should the buyer pay the price?

Normally only after the notary issues the contractual payment-due notice confirming that the agreed safeguards are in place.

Does signing make the buyer the owner immediately?

No. Ownership passes through the required agreement and registration in the land register after the completion conditions are satisfied.

Official sources

• BGB § 311b – notarisation requirement
• BGB § 873 – agreement and land-register entry
• Notar.de – real-estate purchase process
• Notar.de – buying a condominium

Direct answer: For a residential tenancy in Germany, a cash deposit may not exceed three months’ basic rent excluding separately stated operating-cost advances or flat charges. The tenant has a statutory right to pay a cash deposit in three equal monthly instalments. The landlord must keep the money separate from personal assets and the interest belongs to the tenant. At the end of the tenancy, the deposit secures legitimate outstanding claims; it is not an automatic payment for repainting or ordinary wear.

Last reviewed: 23 July 2026. General information only; deposit disputes depend on the contract, handover evidence and specific claims.

1. The maximum amount

Section 551(1) BGB limits the agreed security to three times the monthly rent excluding operating costs shown as a flat charge or advance. This is often called three months’ Nettokaltmiete.

Example: if the basic rent is EUR 1,000 and operating-cost advances are EUR 250, the maximum statutory residential deposit is normally EUR 3,000—not EUR 3,750.

2. The right to pay in instalments

For a cash deposit, the tenant may pay in three equal monthly instalments. The first is due at the beginning of the tenancy; the next two are due with the following rent payments. A contractual clause that removes this right to the tenant’s disadvantage is ineffective.

3. How the landlord must hold the money

• The cash deposit must be held at a credit institution at the usual rate for savings deposits with three months’ notice, unless the parties agree another form.
• The deposit must be separated from the landlord’s own assets.
• The interest belongs to the tenant and increases the security.
• Student and youth residences are subject to a statutory exception from the interest obligation.

The separation requirement protects the tenant if the landlord has financial problems. Tenants should keep the contract, bank transfer confirmation and any deposit-account information.

4. Avoid deposit fraud before moving in

1. Do not transfer a deposit merely to “reserve” an apartment before a tenancy is concluded.
2. Verify the landlord or authorised manager and inspect the apartment.
3. Use the account stated in the signed agreement or a later verified written instruction.
4. Be cautious if payment is demanded through cash-transfer services, cryptocurrency or an unrelated foreign account.
5. Record the condition of the apartment at handover with a signed protocol and dated photographs.

5. What the deposit can secure

The deposit may secure claims arising from the tenancy, including unpaid rent, valid operating-cost balances and compensation for tenant-caused damage. Ordinary wear from contractual use is not automatically damage. The landlord should identify and substantiate any deduction rather than keep the whole deposit without explanation.

6. Return after the tenancy

Section 551 BGB does not state a single fixed return date. The landlord may have a reasonable examination period to check the apartment and quantify open claims. Berlin’s public guidance commonly refers to return within six months where there are no rent arrears or tenant-caused damage. A limited reserve may sometimes remain relevant for an outstanding operating-cost statement, but any retention should be proportionate to the expected claim.

7. A practical tenant checklist at move-out

• Give the correct notice and retain proof of delivery.
• Agree a joint handover appointment.
• Prepare a protocol, photographs and meter readings.
• Return every key and obtain a receipt.
• Provide a forwarding address and bank details.
• Ask for an itemised deposit statement and supporting documents for deductions.
• Set a reasonable written deadline if the undisputed amount is not returned.

8. A practical landlord checklist

• Keep the deposit separate from operating funds from the start.
• Compare move-in and move-out protocols before alleging damage.
• Separate ordinary wear, maintenance and tenant-caused damage.
• Document repair estimates, invoices and rent arrears.
• Return the undisputed balance promptly and explain any reserve.

Frequently asked questions

Can a landlord demand six months’ rent as a residential deposit?

Not as an agreed security governed by section 551 BGB. The normal statutory maximum is three months’ basic rent excluding separately stated operating costs.

Must the tenant pay the entire cash deposit before receiving the keys?

No. The tenant may pay a cash deposit in three equal monthly instalments, with the first due at the beginning of the tenancy.

Can the landlord automatically keep the deposit for painting?

No. The landlord needs a valid contractual and legal claim. Ordinary wear is not automatically recoverable damage.

Official and public sources

• BGB § 551 – limitation and investment of residential security
• Berlin tenant guide – contracts and deposits
• Berlin Welcome Centre – tenancy contract and deposit
• Consumer Centre – avoiding fake-apartment deposit fraud

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 and §35
• KStG §1a and §8b
• GewStG §9
• HGB §161 and GmbHG §13
• GrEStG §1

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.