GER: Fiscal Court on Tax Rules for Holiday Home Rentals

Nov 14, 2025 Benn-Ibler Rechtsanwälte

The German Federal Fiscal Court was tasked with determining under what circumstances losses incurred from a holiday property rented solely to vacationers may be recognised for tax purposes.

Holiday rental property

Since 2008, a woman had exclusively rented out a holiday property to guests, maintaining its availability for this purpose throughout the year. In the years under dispute, 2017 and 2018, the property was let for 72 and 44 days, respectively—figures falling below the local average rental duration. Consequently, she incurred financial losses during these periods. The tax authority subsequently declined to consider the income derived from the holiday home for these years. In response, the woman initiated legal proceedings against the tax office. The local tax court dismissed her claim, citing that she had failed to meet the local rental duration by over 25 percent in both 2017 and 2018. She appealed this decision to the German Federal Fiscal Court (Bundesfinanzhof, hereinafter BFH), which found merit in her appeal, overturned the previous ruling, and remanded the case to the tax court for further review.

Calculation of average occupancy

In this case, the BFH reaffirmed its earlier rules stating that losses from holiday homes that are only rented to vacationers and kept ready for them year-round can be claimed for tax purposes.

However, this means that the occupancy rate must stay at or above the local average over an extended period, not falling below it by more than 25 percent. To assess the average occupancy rate of the holiday apartment, a continuous timeframe of three to five years should be considered, rather than evaluating the 25 percent limit on a year-by-year basis.

BFH IX R 23/24 (12 August 2025)