Freistellung - exemption from construction services tax

Freistellung - what is it?

Freistellungsbescheinigung (shortened to Freistellung) is a document issued by the German tax office (Finanzamt) on the basis of §48b of the income tax act - Einkommensteuergesetz (EStG). The certificate releases the provider of construction services from the obligation to apply §48 EStG, which requires the client to withhold and pay 15% Bauabzugsteuer from every payment for a construction service.

In practice, Freistellung is a one-page document with a reference number (Bescheinigungsnummer), validity date, company details and the Finanzamtu stamp. Before making the full payment, the German contractor checks the document through the BZSt electronic database (Bundeszentralamt für Steuern) - verification takes seconds and is free.

What Freistellung gives you

• 100% payment instead of 82.15% - no funds frozen in Finanzamt

• Required business minimum - some large clients will not sign a contract without it

• No client risk - therefore contract prices without a "risk margin"

• Credibility in the eyes of the Bauleiter / general contractor - Freistellung = company verified by Finanzamt

• Accounting predictability - you do not keep a table saying "how much is at the office, when will it return"

Who must have Freistellung

The obligation applies to every company performing construction services (Bauleistungen) in Germany for a German client - regardless of the country of registered office and legal form:

• Sole proprietorships (JDG / Gewerbe) - regardless of scale of activity

• Commercial law companies - sp. z o.o., S.A., sp. komandytowa, sp. jawna, GmbH

• Polish subcontracting companies - even when your client is another Polish company operating in Germany

• Companies carrying out short contracts - the threshold is measured not by length of stay, but by turnover value with one client in a calendar year

Which works qualify as Bauleistung

The German definition of Bauleistung (§48 EStG) is broad - it covers everything that physically affects a building or land:

• structural, foundation, reinforced concrete works

• electrical, sanitary, heating, ventilation, photovoltaic installations

• insulation, facades, roofing, sheet metal work

• installation of windows, doors, gates, fences, steel and timber structures

• finishing works (plaster, gypsum, tiles, floors, painting)

• earthworks, road works, paving

• installation of fiber optic networks, telecommunications poles

• installation of photovoltaic systems and heat pumps

• demolition, dismantling, specialist post-construction cleaning

Freistellung is not required for: design work alone, investor supervision, delivery of materials without installation, consulting, cleaning work unrelated to construction.

Exception: 5 000 EUR annual threshold

The client does not have to withhold Bauabzugsteuer if the total value of works from one contractor in the calendar year does not exceed:

• 5 000 EUR - in most cases,

• 15 000 EUR - for VAT-exempt services (e.g. construction for entities providing residential rental).

The total value with one client in the calendar year counts. If you have 3 invoices of 2 000 EUR with the same general contractor - 6 000 EUR in total - you exceed the threshold and the withholding obligation arises retroactively from the first invoice.

How to obtain Freistellung - step by step

1. Company activity analysis - we verify the tax obligation in Germany (§48 EStG) and determine the competent Finanzamt

2. Tax registration - we apply for Steuernummer if the company does not have one yet (2-6 weeks)

3. Completing documents - CFR-1, ZUS, US, CEIDG/KRS + translations required by the German office

4. Application preparation - we prepare the application and description of company activity in German

5. Submitting the application - the document set + power of attorney goes to the competent Finanzamtu

6. Correspondence with the office - we maintain regular contact with the German tax office until the decision is issued

7. Receiving the certificate - we inform you about the validity period and hand over the document

8. Deadline monitoring - we watch the validity date and apply for extension in advance

The entire process is remote. You do not travel to Germany, you do not call the office, you do not translate letters.

Why FenixTax

• 20+ years of tax settlements with Germany

• 48 000 tax cases handled

• Fixed fee, 0% commission - regardless of contract value and refund amount

• Deadline monitoring - we apply for extension in advance

• Fully remote procedure - no trip to Germany, no German language required

• 140 service points in Poland + online service

• Full DE package under one roof: Freistellung, VAT, Sokabau, Gewerbe, HR

• Head office in Bielsko-Biała, ul. Żywiecka 155a - you can visit us in person

Refund of construction tax from Germany

If construction tax has already been withheld, it may be possible to recover it. A construction tax refund requires submitting the proper application and proving that the company met the conditions for obtaining Freistellung.

We handle tax refund cases and help recover money that was transferred to the German tax office or withheld by the German contractor.