Can the tax office inspect all rental contracts? The ruling

Germany's highest tax court has ruled. What this means for landlords and tenants alike

Frankfurt am Main

October 28, 2024

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The ruling is causing quite a stir. In a ruling published on October 24, 2024, the Federal Fiscal Court clarified whether the tax office may inspect rental agreements to investigate possible tax violations (case number IX R 6/23).

The court case

The case centered on a landlord who reported her income and submitted bank statements but refused to disclose her rental agreements out of respect for the tenants' privacy. The tax office, however, demanded this disclosure to ensure that the rental agreements were not "too favorable," for example, when renting to family members or friends, as otherwise tax benefits could be lost.

The Federal Fiscal Court has now determined that disclosure of rental agreements is “a necessary and proportionate measure to combat tax fraud.”

Contradiction between data protection and tax interests

The ruling also emphasizes the rights of tenants, who have a strong fundamental right to data protection and self-determination over their data. Nevertheless, the Federal Fiscal Court ruled in favor of the tax office. The landlord must submit the rental agreements and inform their tenants about them. From the court's perspective, combating tax fraud outweighs data protection in this case.

Next steps for those affected

Landlords who find themselves in a similar situation should review their rights and can appeal any such requests from the tax authorities. The current decision could end up before the Federal Constitutional Court or even the European Court of Justice, as compliance with the General Data Protection Regulation plays a key role here.