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ENERGY

EXPLAINED: How much will Germany’s gas levy cost you?

On Monday, gas operators in Germany announced an additional charge of 2.419 cents per kilowatt hour which will come into force in October. Here’s what you need to know.

Published: 15 August 2022 16:42 CEST
A man holds a wad of euro notes next to a radiator.
A man holds a wad of euro notes next to a radiator. Photo: picture alliance / dpa | Jens Büttner

What’s going on?

Households in Germany will face significantly higher gas prices this autumn and winter.

The gas transmission system operator, Trading Hub Europe, announced on Monday that German gas suppliers will be allowed to add 2.419 cents per kilowatt hour to the price of gas from October onwards, to help them cope with hugely increased procurement costs. 

The surcharge is aimed at sharing out the soaring costs borne by energy importers after Russia drastically decreased gas supplies to Germany after the invasion of Ukraine.

Gas importers have so far taken on the additional costs themselves, but a new rule agreed by the government allows them to pass on ballooning costs via the levy to households from October 1st.

How much more are you likely to pay for gas?

For an average family house of 160 square metres, which uses 23,000 kilowatt hours per year, this surcharge would amount to around an extra €556.

Those who live in an apartment of 85 square metres, which uses an average of 12,000 kilowatt hours per year, will be likely to pay an extra €290 annually.

Those living in an apartment of 50 square metres are likely to pay an extra €121 to €169 per year.

The levy will primarily affect property owners with gas heating, as well as tenants living in households that have floor heating and their own gas contracts.

What is not yet clear, however, is how households in Germany supplied with Fernwärme (district heating) will be affected by the levy. 

A gas bill in front of a meter, which reads: “your gas bill in detail”. Photo: picture alliance/dpa | Bernd Weißbrod

In many places, this type of energy supply comes from gas-fired power plants and operators of such power plants are supposed to pay the surcharge.

So far operators have no legal means of passing on these costs to their customers, but the German government wants to look into this issue, so this is likely to change. 

Will VAT be charged on the levy?

The German government wants to waive the value-added tax on gas, but it needs permission from the EU to do so. Finance Minister Christian Lindner (FDP) wrote to the Commission on Friday asking for an exception to EU law to be granted so that Germany does not have to charge VAT on the state gas levy.

READ ALSO: Germany pledges inflation relief tax package worth €10 billion

In a letter to Finance Commissioner Paolo Gentiloni, the FDP politician wrote: “VAT on state-imposed levies drives up prices and meets with increasing resistance from the population, especially in the current, exceptional situation.”

It is not yet clear how the Commission is likely to respond to this request.

Haven’t gas prices already increased?

Yes. Numerous gas suppliers have already increased their prices more than once throughout the course of the year.

Most recently, suppliers such as Rheinenergie, Wuppertaler Stadtwerke and Energieversorgung Oberhausen announced significant rate increases. “There is a major wave of price increases,” says energy expert Udo Sieverding from the consumer centre of North Rhine-Westphalia.

In the case of Rheinenergie, for example, an average household, with 15,000 to 20,000 kilowatt hours of annual consumption, is already paying just under €2,000 in additional annual costs after the latest round of price hikes, even before the levy.

Will there be government help for consumers?

Economics Minister Robert Habeck (Greens) announced that the third relief package from the German government will be in place by the start of the levy on October 1st. The traffic light coalition has also agreed on a reform of the housing allowance and is planning a permanent heating allowance for low-income households.

In addition, the new ‘citizen’s allowance’ – a replacement of the current unemployment benefits system – is due to come into effect next year, and promises higher standard rates for the unemployed. 

READ ALSO: Bürgergeld: What to know about Germany’s unemployment benefits shake-up

At the beginning of September, Chancellor Olaf Scholz (SPD) will meet with social partners and other experts as part of a concerted action to discuss relief measures. The main focus will be on supporting lower-income groups that are hit hardest by high energy costs.

The SPD and welfare associations are proposing, for example, monthly direct payments to recipients of basic security and housing allowances and a price cap for a basic quantity of gas is also being discussed.

Economics Minister Robert Habeck explained: “Especially for those who don’t have much, it’s a heavy burden that is impossible or difficult to bear.” 

On Monday, Chancellor Olaf Scholz (SPD) tried to reassure people via Twitter that the government would help balance out the extra costs. 

In the tweet, he said, “we won’t leave anyone alone with the higher costs”. At the same time, Scholz admitted: “It’s getting more expensive – there’s no beating around the bush. Energy prices continue to rise.” So far, he said, government aid of more than €30 billion has already been agreed upon. 

READ ALSO: Germany’s Scholz pledges more relief for lowest earners

Vocabulary

Levy – (die) Umlage

Relief – (die) Entlastung

Value Added Tax – (die) Mehrwertsteuer

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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PROPERTY

Who pays broker’s fees on property in Germany – and how much do they cost?

One of the major hidden costs of buying and selling property in Germany is the estate agent's commission, or broker's fee. We look at some of the unusual rules around it - and how much you can expect to pay.

Published: 17 September 2024 16:25 CEST
Who pays broker's fees on property in Germany - and how much do they cost?

There are many areas of life in which things in Germany function just that little bit differently – and buying a house is no exception.

Though the buoyant property market in the Bundesrepublik makes it an attractive place to buy, anyone looking to get their foot on the housing ladder should consider the hidden fees they might incur.

Beyond interest rates, taxes and fees for notaries and translators, one major outlay is the estate agent’s commission, which can sometimes stretch to thousands of euros.

Here’s what to know about these hefty fees and how you might be able to lower them. 

Who pays commission on property transactions in Germany?

If you come from another European country or somewhere like the United States, you may be used to a system in which the seller pays the broker’s fee. This intuitively makes sense because the estate agent is there to market the property, liaise with buyers and ultimately get the best price for the seller – so it makes sense that the seller should pay for these services.

Until recently, however, it was the buyer who was responsible for paying the entirety of the estate agent’s commission in Germany. That meant that these fees – which could be as high as seven percent of the purchase cost – were added to the mountain of extra costs buyers had to contend with, from notary fees to land transfer tax.

READ ALSO: The hidden costs of buying a house in Germany

Luckily for buyers (but less so for sellers), this was changed under a law that came into force at the end of 2020. Since then, costs are generally split 50/50 between buyers and sellers.

However, there are some details that are important to note here. If the seller commissions the estate agent to help them sell their home, they are technically liable for the costs but must pay a minimum of 50 percent. 

If the buyer commissions the estate agent to find them a home, the same rules apply the other way around: the buyer is liable for the costs but can obtain a maximum of 50 percent from the seller.

In each case, the side that commissioned the broker must prove they have paid their share before the other side is liable to pay theirs. 

How much do estate agents’ fees cost in Germany?

Commission on property sales varies from state to state but is generally set at between 5 and 7 percent of the purchase price.

According to online portal ImmobilienScout24, these were the standard rates that applied in each of the federal states in 2024, with the number in brackets representing a 50 percent share of the costs:

Baden-Württemberg: 7.14 percent (3.57 percent)

Bavaria: 7.14 percent (3.57 percent)

Berlin: 7.14 percent (3.57 percent)

Brandenburg: 7.14 percent (3.57 percent)

Bremen: 5.95 percent (2.97 percent)

Hamburg: 6.25 percent (3.12 percent)

Hesse: 5.95 percent (2.97 percent)

Lower Saxony: 4.76 – 5,95 percent or 7.14 percent, depending on the region. (2.38 – 3.57 percent)

Mecklenburg Western-Pomerania: 5.95 percent (2.97 percent)

North Rhine-Westphalia: 7.14 percent (3.57 percent)

Rhineland-Palatinate: 7.14 percent (3.57 percent)

Saarland: 7.14 percent (3.57 percent)

Saxony: 7.14 percent (3.57 percent)

Saxony-Anhalt: 7.14 percent (3.57 percent)

Schleswig-Holstein: 7.14 percent (3.57 percent)

Thuringia: 7.14 percent (3.57 percent)

If it’s hard to gauge how much this means in real terms, we can take the example of two properties: a €200,000 apartment and a €500,000 family home.

In the state of Hesse, a buyer splitting the broker’s fee equally with the seller would pay €5,940 to buy the €200,000 apartment and €14,850 to buy the €500,000 house.

In pricier Berlin, meanwhile, the same buyer would pay €7,140 on the €200,000 apartment and €17,850 on the €500,000 house.

READ ALSO: Is autumn 2024 the right time to buy a property in Germany?

Here’s where it gets more complicated, however: under German law, you are technically free to negotiate the commission with your estate agent.

That means that, especially in areas with stiff competition, you may be able to secure a better deal. 

Do I always have to pay commission in Germany? 

Not always. In fact, as a seller, you’re perfectly free to sell your property privately without enlisting the help of a real estate agent.

The benefit of this, of course, is that you can potentially save thousands of euros in fees, both for yourself and any prospective buyer. 

On the flip side, though, you will need to take the entire job of the estate agent on yourself, from marketing the property to liaising with potential buyers and finally closing the deal.

Real estate agent Germany

A real estate agent talks to prospective tenants at an apartment viewing. Photo: picture alliance/dpa | Tobias Hase

There can also be some upfront costs involved in commissioning things like floor plans and professional photography, as well as the time you’ll need to invest in learning all the procedures and preparing relevant documents for notary – to name just a few examples.

Ultimately, though, it’s up to you to decide whether the expense of working with a professional broker is worth it in the end. 

As a buyer, there are also some situations where you’ll see the words ‘provisionsfrei’ – or commission-free – written in a property listing.

This is fairly common in new-build properties, where the developer may sell the homes directly to interested buyers. More rarely, an existing property may be listed without commission, making it a more attractive proposition.

In both cases, it’s possible that commission has been built into the purchase price, so you may not necessarily be getting a better deal.

Another case where you’re likely to be able to avoid commission as a buyer are so-called Kapitalanlagen – or buy-to-let properties. 

READ ALSO: Should you think about purchasing a buy-to-let property in Germany?

These tenanted properties are designed to be bought as investments: buyers can enjoy additional rental income over time and, ideally, will also make money when they come to sell the property several years later.

For this reason, costs are generally kept slightly lower for the buyer by eschewing the standard broker’s commission. 

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