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How will the 2024 budget affect foreigners in Germany?

Foreigners living in Germany will see some social services increasing in 2024 - but also grapple with budget cuts in core areas of their everyday lives. We lay out what to expect.

Published: 21 September 2023 17:14 CEST
A piggy bank
A German piggy bank with euro notes. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Over the summer, Germany approved its much debated budget for 2024, which is to be officially adopted in November.

Some expenditures are increasing, namely those for defence. The German government has already set aside €51.8 billion in military spending for 2024, up from €50 billion this year. This puts it at the NATO-set target of two percent of each member state’s GDP.

The Bundesrepublik has for years been criticised that it did not meet this quota, but for the first time is set to – and even exceed it – as it increasingly strives to revamp its flailing Bundeswehr and lend more support to Ukraine.

But to budget for this increase – among others – without going into debt, it’s also cutting certain services which affect foreigners in Germany. Here’s what you need to know.

READ ALSO: German government approves belt tightening budget for 2024

Elterngeld is being halved

Many move to Germany for higher paying jobs which the country offers, particularly in STEM fields. But couples and individuals who have a taxable income of more than €150,000 per year will no longer qualify for Elterngeld (parental allowance) when they go on parental leave.

Previously the benefit was available to couples earning less than €300,000, or €250,000 for single parents. The move is expected to affect around 60,000 families in Germany.

READ ALSO: ‘A horrible idea’: How cuts to Elterngeld will affect families in Germany 

Less funding for trains

For years the German government has vowed to refurbish its rail services, which are notorious for their frequent delays and cancellations. It had even set aside €45 billion for Deutsche Bahn in a far-reaching climate package passed in March. Yet the government has now said it will currently only fund the rail service “as far as financially feasible”.

For environmentalists, this was a double whammy as the budget still includes tax breaks for motorists – something which the Green Party has pushed Finance Minister Christian Lindner (FDP) to scratch out. 

But train enthusiasts looking to explore Germany and beyond can still look forward to speedy services coming out in the coming months, often in partnership with Austrian and French rail lines. And despite talk of raising the price, the Deutschlandticket is still set to be available for just €49 a month (at least for the moment).

The Inter City Express, ICE 4, of Deutsche Bahn, arrives at Interlaken Ost station in Bern.

The Inter City Express, ICE 4, of Deutsche Bahn, arrives at Interlaken Ost station in Bern. Photo: picture alliance/dpa/KEYSTONE | Peter Schneider

Reducing funds for digital services

Germany has become woefully well-known for its lack of digital services available, include many which would make the lives of foreigners much easier such as an online Anmeldung or renewing a visa digitally with the immigration offices.

This has steadily been improving, especially since Germany passed an Online Access Act (OZG), to significantly increase such services. But for this year the Interior Ministry has earmarked €3.3 million for the digitalisation of administration and administrative services next year – compared to €377 million this year.

It’s true that many German politicians – including Chancellor Olaf Scholz (SPD) – are pressing for digitalisation in part to persuade more foreigners to come to, and feel comfortable in, Germany. But with the lack of funding, a digital revolution may take a bit longer than hoped. 

READ ALSO: Is Germany a failed state for digital public services?

Higher health care contributions

The one billion budget for long-term health insurance (Pflegeversicherung) is being axed, but the gap is being made up for by higher health care contribution rates which were adapted in July of this year. However some people, such as those with children, have seen their contribution rates decrease slightly. 

READ ALSO: German health insurance contributions ‘to increase in 2024’

More social benefits

The budget may seem to spell doom and gloom for many, but it’s also giving some social services a major boost. Germany’s new unemployment benefit, Bürgergeld, will go up by €23.8 billion in 2023 to €24.3 billion next year.

An additional €127 billion is being allocated to pension insurance (Rentenversicherung), which Germany sees as sorely needed as its population ages and the cost of living – with an inflation rate that sits over six percent – rises.

Foreigners who are accessing some social benefits or their pension could benefit from these changes. 

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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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