German Utility Bills Guide: Nebenkostenabrechnung for Landlords

What is a German Utility Bill and When Do You Need One?

A German utility bill (Nebenkostenabrechnung) is your annual statement of all operating costs incurred from renting your property. You list all actual operating expenses and distribute them proportionally among your tenants. The result shows whether tenants owe additional payments or receive credits.

Crucial to understand: You only need to create a utility bill if you've agreed on advance payments for utilities in the rental contract. According to § 556 BGB (German Civil Code), you're then obligated to settle accounts annually. Your tenants have the right to examine the bill and inspect supporting documents.

Alternative: Flat Rate Without Billing Obligation

If you've agreed on a flat utility rate or gross cold rent, the billing obligation doesn't apply. Additional demands aren't possible in this case. An exception applies to heating and hot water costs – these must always be billed based on consumption.

Legal Framework: Essential Requirements

The most important laws for your utility billing are the German Civil Code (BGB), the Operating Costs Ordinance (BetrKV), and the Heating Costs Ordinance (HeizkostenV). These regulations determine which costs you can pass on and how the billing must be structured.

Since 2023, the CO₂ Cost Allocation Act has been added, regulating the distribution of CO₂ costs between you and your tenants. From 2027, remote reading for heating and hot water costs becomes mandatory.

Formal and Content Requirements in Detail

Your utility bill must contain specific mandatory information to be legally effective. Missing important information allows tenants to challenge the entire bill.

These Details Are Mandatory:

• Name of the billing party (normally you as landlord)
• Complete tenant address
• Exact billing period (maximum 12 months)
• For tenant changes: separate usage periods
• Precise property description with address
• List of all cost types according to rental contract
• Total costs for each cost type
• Explanation of the allocation key used
• Calculation of proportional costs per tenant
• Overview of advance payments made
• Determination of balance (additional payment or credit)

Structure and Comprehensibility

Your bill must be comprehensible for legal laypeople. Clear structure, precise explanations, and clear presentation make it easier for tenants to review. The allocation key used must always be explained – missing this information makes the bill contestable.

Allocatable Utility Costs: What Can You Bill?

You cannot pass all property costs to tenants. The Operating Costs Ordinance precisely defines which ongoing costs are allocatable:

These Costs You Can Allocate:

• Property tax
• Water supply and drainage
• Heating and hot water preparation
• Elevator (operation and maintenance)
• Street cleaning and waste disposal
• Building cleaning
• Garden maintenance
• Lighting (common areas)
• Chimney cleaning
• Property and liability insurance
• Caretaker (operating costs, not administration)
• Community antenna/cable connection (until June 30, 2024)
• Machine insurance
• Other operating costs (if contractually agreed)

These Costs You Bear Yourself:

• Administrative costs
• Maintenance and repairs
• One-time purchases (e.g., new heating system)
• Modernization measures
• Vacancy costs (except under special circumstances)

Important Change: Cable TV Since July 2024

Since July 1, 2024, you can no longer allocate cable TV costs to all tenants as a flat rate. The ancillary cost privilege was abolished by the Telecommunications Modernization Act. Tenants can now freely choose their TV reception and must conclude their own contracts.

Allocation Keys: Distributing Costs Fairly

The allocation key determines how you divide total costs among your tenants. The choice of key must be appropriate and comprehensible for everyone.

The Four Most Important Distribution Keys:

Floor area: The most common key for most operating costs. Larger apartments bear a greater share of costs.

Number of persons: Sensible for consumption-dependent costs like water or waste. More persons = higher costs.

Consumption: Mandatory for heating and hot water costs (at least 50%, maximum 70% based on consumption).

Units: For equally sized apartments or for certain cost items (e.g., elevator).

Important Rules for Allocation Keys:

• You must agree on the key in the rental contract
• Unilateral changes aren't permitted
• The key must be explained in the bill
• For vacancies, you can't simply adjust the key
• Different cost types can have different keys

Heating and Hot Water Costs: Special Regulations

Special provisions apply to heating costs that you must absolutely observe. The Heating Costs Ordinance prescribes consumption-based billing.

Consumption-Based Billing is Mandatory

At least 50%, maximum 70% of heating and hot water costs must be distributed according to measured consumption. You can allocate the rest according to another key (usually floor area). This division is intended to create an incentive for energy saving.

Remote Reading Technology from 2027

By December 31, 2026, all heat cost allocators, heat and hot water meters must be converted to remote reading technology. From 2027, operating non-remote readable devices is prohibited.

Important Dates

• Since December 2021: New devices must be remotely readable
• Until December 31, 2026: Retrofit all old devices
• From January 1, 2027: Operating ban for non-remotely readable devices

Monthly Consumption Information (UVI)

Once you've installed remotely readable devices, you must provide tenants monthly information about their consumption. This can be done via email, app, web portal, or mail.

Content of Monthly Information

• Current consumption
• Comparison to previous month
• Comparison to previous year
• Contact details for inquiries

Tenant Reduction Rights

If you don't comply with new regulations, tenants may reduce their heating cost bill:

• 3% for missing remote reading
• Additional 3% for missing monthly consumption information
• 15% for completely missing consumption-based billing

CO₂ Cost Allocation Since 2023

Since January 1, 2023, you share CO₂ costs from heating with your tenants. The allocation follows a step model based on the building's energy efficiency.

How the Allocation Works:

The worse your building's energy efficiency, the higher your share of CO₂ costs. For very efficient buildings (under 12 kg CO₂/m² per year), tenants bear 100% of CO₂ costs. For very inefficient buildings (over 52 kg CO₂/m² per year), you as landlord bear 95%.

The CO₂ Price 2025: €55 per ton of CO₂

Billing Obligations:

• CO₂ allocation must be shown in the heating cost bill
• Missing allocation allows tenants to reduce heating costs by 3%
• You need your building's CO₂ emission data
• Calculation follows the legal step model

Deadlines and Timelines: What You Must Observe

Strict deadlines apply to utility billing, and compliance determines success or failure.

Most Important Deadlines Overview:

Billing deadline: After the billing period ends, you have 12 months to create the bill and deliver it to your tenant.

Example: If the billing period ends December 31, 2025, the bill must reach the tenant by December 31, 2026.

Additional demands: Become due 30 days after bill receipt.

Credits: You must pay out within 30 days.

Tenant objections: Tenants have 12 months from receipt for objections.

Consequences of Missing Deadlines:

If you miss the 12-month deadline, you usually lose the right to additional demands. An exception exists only if you're not responsible for the delay (e.g., missing billing documents from energy supplier).

Special Cases for Tenant Changes:

If a tenant moves during the billing period, you create a proportional bill. You distribute costs daily across respective rental periods.

Documents and Evidence: Your Documentation Obligation

You need corresponding receipts for every item in your utility bill. You must keep these and provide them to tenants for inspection upon request.

These Documents You Need:

• Service provider invoices
• Municipal fee notices
• Utility company contracts
• Property tax assessment
• Insurance invoices
• Caretaker bills
• Maintenance contracts and invoices

Digital Document Inspection Since 2025

Since January 1, 2025, you may provide documents digitally. This means:

• Scans or PDFs are sufficient
• Provision via email or online portal possible
• Only applies to residential space, not commercial
• Traditional inspection of original documents remains possible

Retention period: Keep all receipts for at least 12 months after bill delivery, as tenants can raise objections during this period.

Managing Special Situations

Handling Vacancy Correctly

Operating costs for vacant apartments generally cannot be allocated to other tenants. You bear these costs as landlord. Unilateral adjustment of the allocation key isn't possible.

Exception: For very short vacancies or if you can prove vacancy doesn't affect certain cost types (e.g., property tax), proportional allocation may be possible.

Mixed Use: Residential and Commercial

If your building contains both apartments and commercial spaces, you must consider different usage types in cost distribution.

Important Points

• Commercial use often causes higher costs
• Preliminary deduction for commercial with significantly different use
• Separate recording of consumption costs
• Appropriate distribution keys for mixed use

Common Mistakes and How to Avoid Them

From practice, we know certain mistakes occur repeatedly. With some attention, they can be easily avoided.

Top 10 Most Common Mistakes:

1. Missing rental contract agreement: No allocation possible without clear regulation
2. Wrong billing period: Observe maximum 12 months
3. Missing allocation key specification: Makes entire bill contestable
4. Late delivery: No additional demands possible after 12 months
5. Allocating prohibited costs: Administration and maintenance are off-limits
6. Wrong vacancy treatment: Don't allocate costs to other tenants
7. Missing CO₂ cost allocation: Leads to 3% reduction right
8. Inadequate receipts: Complete documentation is mandatory
9. Calculation errors with tenant changes: Precise period division required
10. Violation of remote reading obligation: From 2027, reductions up to 6% threaten

Professional Tips for Error-Free Bills:

• Create a checklist with all mandatory information
• Collect receipts systematically throughout the year
• Regularly check changes in case law
• Calculate sufficient time for billing
• Seek legal advice when uncertain

Frequently Asked Questions

Can I create utility bills during the year?

No, the billing period must comprise at least twelve months. Mid-year billing is only possible in special cases, such as lease termination or ownership change. Then you create an interim bill for the actual rental period.

What happens if I miss the billing deadline?

If you miss the 12-month deadline, you normally lose the right to additional demands. You can only make additional demands if you're not responsible for the delay – such as when important documents from the energy supplier were delivered too late.

Can I bill repair costs as utilities?

No, repair and maintenance costs are generally not allocatable. You as landlord bear these costs yourself. Only ongoing operating costs like maintenance, cleaning, or energy supply are allocatable.

Must I observe anything special with CO₂ cost allocation?

Yes, since 2023 you must share CO₂ costs with tenants according to your building's energy quality. The allocation must be shown in the heating cost bill. If missing, tenants may reduce heating costs by 3%.

How do I handle vacancy in utility billing?

You cannot allocate operating costs for vacant apartments to other tenants – you bear these costs yourself. Unilateral adjustment of the allocation key isn't permitted. For very short vacancies, there are exceptions that are legally disputed.

What changes with the remote reading obligation from 2027?

From 2027, all heat cost allocators and meters must be remotely readable. You must then also send monthly consumption information to your tenants. For non-compliance, tenants may reduce their heating cost bill by up to 6%.

Conclusion: Legally Compliant Utility Billing with System

Utility billing may seem complex at first glance, but with the right knowledge and structured approach, you'll master this task successfully. The most important success factors are complete documentation, observing all deadlines, and precise attention to legal requirements.

Particularly important: Stay informed about changes in case law. Regulations on CO₂ costs, remote reading, and digital document inspection show that rental law continuously evolves.

With CIRO, creating your utility bills becomes child's play. Our platform guides you step-by-step through the process, automatically considers all current legal changes, and helps you avoid typical mistakes. This saves valuable time and lets you focus on what's really important – successfully managing your property portfolio.

*Status: January 2025. All information without guarantee. For legal uncertainties, we recommend consultation with a specialist lawyer for rental law.*