German Freistellung – what is it and how can you obtain it?

Who should have a Freistellungsbescheinigung?

The obligation to withhold and pay the construction tax lies with the contractor when a subcontractor performs construction work without a valid Freistellungsbescheinigung and the payment amount exceeds 5,000 euros, or the total value of invoices issued so far surpasses this threshold.
Every entrepreneur operating as a subcontractor in Germany – regardless of the legal form of their business – should hold this document.
If you are a contractor receiving work from another company, you are also required to provide a valid Freistellungsbescheinigung to the company for which you perform services.

What happens if the Freistellungsbescheinigung is missing?

If you are a subcontractor and do not have a valid Freistellungsbescheinigung, your contractor is obliged to withhold 15% of the payment amount as security for any potential tax liabilities to the German tax office (Finanzamt).

If you are the contractor and your subcontractor has not provided the required Freistellungsbescheinigung at the time of invoice payment, you are required to withhold 15% of the invoice amount, file a tax declaration for this withholding, pay the advance tax to the tax office, and provide your subcontractor with a certificate confirming the submission.

It should be noted that the contractor is always responsible for withholding and paying the construction tax (Bauabzugsteuer).

However, this tax is not applied if the total value of construction services provided to the same contractor does not exceed 5,000 euros.

When should the application for a Freistellungsbescheinigung be submitted?

The application for a Freistellungsbescheinigung should be submitted before starting construction work in Germany. This helps avoid construction tax deductions and payment delays from clients. In practice, it is best to apply immediately after signing the first contract or receiving a project, so that the document is valid when the first invoice is issued. Obtaining the Freistellungsbescheinigung in advance demonstrates the reliability of your business and facilitates cooperation with German companies.

How long does it take to receive the Freistellungsbescheinigung?

The processing time for obtaining the Freistellungsbescheinigung is usually between one week and up to three months. This period depends on the tax office (Finanzamt) to which the documents are submitted and on the officer handling the application. As is often the case, some officials process documents faster than others.

A Polish entrepreneur providing construction services in Germany falls under one of four tax offices: Finanzamt Cottbus, Finanzamt Hameln, Finanzamt Nördlingen, or Finanzamt Oranienburg. The responsible office is determined by the first letter of the entrepreneur’s surname or the company name (in the case of legal entities). Based on experience, the Finanzamt Nördlingen typically has the longest processing times.

The waiting period may also be extended due to holiday seasons or public holidays.

What can be done to speed up the issuance of the Freistellungsbescheinigung?

• You should submit the complete set of required documents and signed forms to our Zgorzelec office as soon as possible.
• To expedite the process, we prepare the forms and documentation in our company within one day and send them the same day via the German postal service. In Germany, the postal system is very efficient, with 90% of mail delivered the next day.
• If we notice that the issuance of the Freistellungsbescheinigung is being delayed, our employees contact the official handling the application directly to request an expedited processing.
• Frequent delays in issuing this document, or sometimes refusals, are often caused by entrepreneurs not having their tax matters in order with the German tax office. This may include outstanding income tax or VAT payments. Another reason could be failure to fulfill all obligations toward the German tax authorities, such as untimely responses to correspondence or missing tax verifications. Therefore, before submitting Freistellungsbescheinigung documentation, our employees review with the client whether all past matters have been properly handled with the German tax office. If not, with the entrepreneur’s consent, we assist in completing any outstanding formalities with the office.
• Delays also often occur because the certificate is sent to the provided address in Poland via regular mail, not registered mail. In practice, entrepreneurs who provided a Polish mailing address received this document with significant delays or not at all, as it could be lost by the Polish postal service. For this reason, we recommend that our clients use our German mailing address. Most of our clients, under a signed agreement with us, use this service in addition to the German mailing address, which ensures timely delivery, professional and error-free preparation of documentation and filings, and invoicing in accordance with both Polish and German law.

What documents are required to submit an application for a Freistellungsbescheinigung?

If you are applying for this certificate for the first time, the company must first be registered with the appropriate tax office. To obtain the Freistellungsbescheinigung, you must submit:

• Original Tax Residence Certificate (Ansässigkeitsbescheinigung), which is issued by the Tax Office in Poland. The application can be submitted independently online at the website https://www.podatki.gov.pl/e-urzad-skarbowy/
  . At that point, we apply for the CFR-1 document.

• A photocopy of the business registration certificate (CEIDG) along with a photocopy of the sworn translation.
• A photocopy of the identity card.
• A photocopy of the signed contracts.
• A copy of invoices issued for the assignment in Germany.
• Completed application forms containing several important pieces of information, including:

1. Company details of the entity applying for the Freistellungsbescheinigung, including the German tax identification number and bank account number.
2. Number of employees employed in Poland and the number of employees posted to Germany.
3. Details regarding the client and the construction project.

If a contractor of the construction service is applying for the certificate again to extend it, a new application must be submitted along with the required documents. In some cases, the written application must be supplemented with a response to a letter, a tax verification, or a settlement with the German tax office.

For what period is the Freistellungsbescheinigung issued?

In practice, we know that the first Freistellungsbescheinigung is usually issued for a period of 3 months. The second and subsequent certificates are issued annually for a period of one year, provided that all filings and matters with the German tax office have been submitted and handled on time.

How to recover 15% Bauabzugsteuer (construction withholding tax)?

If 15% Bauabzugsteuer has been withheld, you can submit a declaration for a refund of the construction tax (the withheld amount) after the end of the calendar year in which the withholding occurred. First, a tax verification of the company and employees must be conducted. Once it is confirmed that there is no tax liability in Germany, you can submit a refund application. If a tax liability does exist, the taxes must be settled before applying for a refund of the withheld Bauabzugsteuer. The application must include the form confirming the Bauabzugsteuer reporting (the one you received from the client).

If you want to obtain the Freistellungsbescheinigung quickly, we invite you to use the services of our office.

See what else we can handle for you

DOCUMENT VERIFICATION:

Not sure if you filled out the documents correctly? Concerned that you might not know all the requirements for running a construction company in Germany? Do you need specialized consulting?

Contact us, and we will thoroughly verify your documentation for compliance with German law.

SECRETARIAT:

As part of the secretariat’s work, we will assist with:

• the handling of correspondence, both email and traditional mail,
• notifying about incoming mail and responding to questions regarding received documents, as well as assisting in efficiently replying to it.

INVOICING:

Don’t have time to issue invoices? Want to focus on growing your business and leave the paperwork to us?

Under a signed agreement, we will gladly support you with:

• issuing invoices in compliance with applicable regulations,
• preparing quotations,
• issuing invoice corrections,
• drafting reminders for unpaid invoices,
• communicating with clients.

DOCUMENT STORAGE:

Do you provide construction services in Germany or post employees there? Do you need a place to store your company documentation?

As a Polish company, you are required to store your company documentation at a designated address in Germany to allow inspection by the relevant authorities.

Come to us and entrust your documents to us.