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CO2 Cost Split for Landlords in Germany: 2026 Guide

Last updated: 16 September 2026 · Reading time approx. 9 minutes

German landlords pay the carbon price on natural gas and heating oil to their supplier — but since 2023 they may only pass on part of it. The size of that part is decided neither by the lease nor by the apportionment key, but by a statutory table into which the building is sorted according to its own carbon dioxide emissions per square metre of living space. For an unrenovated apartment block, 95% of the CO2 cost stays with the owner; for an efficient new build, nothing does. This article works the share out in full, shows the three cases in which it falls or disappears, and names the two 2028 and 2029 deadlines that switch the model off for newly installed gas heating.

Why this item works differently from every other service charge

Operating costs are, in principle, a matter of agreement: the parties "may agree that the tenant bears the operating costs" (section 556(1) sentence 1 of the German Civil Code, BGB). The Carbon Dioxide Cost Allocation Act (Kohlendioxidkostenaufteilungsgesetz, CO2KostAufG) breaks exactly that principle. Under section 6(1) sentence 1 CO2KostAufG, agreements under which a residential tenant bears more than the share attributable to them are void. And section 2(5) CO2KostAufG makes clear that the Act takes precedence over both the Heating Costs Ordinance (HeizkostenV) and "agreements under legal transactions". A standard clause therefore does not help here: the landlord share is not a negotiating position but the result of a calculation.

The Act applies to buildings in which fuels with statutorily defined emission factors are burned, and to the commercial supply of heat (section 2(1) CO2KostAufG). District heating is included, even from installations covered by the European emissions trading scheme — the only carve-out there is for buildings that first received a heat connection after 1 January 2023 (section 2(4) CO2KostAufG).

The step model: ten bands, one figure

The allocation depends solely on the building's specific carbon dioxide emissions in kilograms per square metre of living space per year. That figure is sorted into the table in the Annex to sections 5 to 7 CO2KostAufG:

CO2 emissions per m² of living space per yearTenant shareLandlord share
below 12 kg CO2/m²/a100%0%
12 to below 17 kg90%10%
17 to below 22 kg80%20%
22 to below 27 kg70%30%
27 to below 32 kg60%40%
32 to below 37 kg50%50%
37 to below 42 kg40%60%
42 to below 47 kg30%70%
47 to below 52 kg20%80%
52 kg and above5%95%

The spread is worth noting: 95 percentage points separate the best band from the worst, but only 10 separate two neighbouring bands — and a figure that moves by 5 kg is enough for that jump. That is the real lever: not the full refurbishment, but crossing a single band boundary changes your share measurably.

How your share arises — in four steps

1. Determine the figure. The landlord determines emissions "in the course of the annual heating cost statement" in kilograms of CO2 per square metre of living space per year and rounds to one decimal place (section 5(1) CO2KostAufG). Where the accounting period is shorter than a year, the table values are reduced pro rata.

2. Take the numbers from the invoice. You do not have to estimate the emissions: fuel and heat suppliers must state the fuel emissions in kilograms of CO2, the embedded CO2 price component, the calorific-value-based emission factor and the energy content on the invoice (section 3(1) CO2KostAufG).

3. Check the price. The price component is the emissions multiplied by the relevant certificate price plus VAT (section 3(3) CO2KostAufG). Until 2025 that was the fixed price under section 10(2) of the Fuel Emissions Trading Act (BEHG) — most recently 55 euros per tonne. For 2026 the midpoint of the price corridor applies, and that corridor runs from 55 to 65 euros under section 10(2) sentence 4 BEHG, so its midpoint is 60 euros per tonne (section 4(1) no. 2 CO2KostAufG). From 2027 the average auction price between 1 July and 30 November of the preceding year takes its place; the Federal Environment Agency publishes the figure at least ten working days before the start of the year (section 4(1) no. 3 and (2) CO2KostAufG).

4. Split and distribute. The landlord deducts their own share from the total and distributes the remainder among the individual tenants using the agreed heating cost key (section 7(1) CO2KostAufG).

Worked example. An apartment block with 600 m² of living space; the gas invoice states 18,000 kg of CO2. Figure: 18,000 ÷ 600 = 30.0 kg/m²/a → band "27 to below 32" → landlord 40%, tenants 60%. CO2 cost in 2026: 18 t × €60 = €1,080 net. Of that the owner bears €432 and the tenants €648. That works out at €0.72 per square metre per year which is not recoverable. If the same building were at 52.0 kg/m²/a (31,200 kg), the CO2 cost would be €1,872 and 95% of it — €1,778.40, or €2.96/m²/a — would sit with the owner. A poorly insulated building therefore pays the carbon levy roughly four times over.

Three cases in which you bear less, or nothing

The model assumes the owner can improve the building. Where the law forbids that, section 9 CO2KostAufG corrects the allocation — and this provision is routinely overlooked in practice.

In the example above, halving turns €432 into €216 — across a portfolio with several properties in a social preservation area, that is no rounding item.

Where the tenant buys the fuel: reimbursement only on request

With individual flat heating systems under the tenant's own supply contract the calculation reverses: the tenant determines the figure for their flat (section 5(3) CO2KostAufG) and the landlord must reimburse their share (section 6(2) sentence 1 CO2KostAufG). Three details decide the money here:

The landlord must, however, point out the reimbursement claim in text form both when the lease is concluded and when a heating system under section 43 GModG is installed (section 6(2) sentence 6 CO2KostAufG).

Commercial space: a flat half

There is no step model for non-residential buildings. There, agreements under which the tenant bears more than 50% of the carbon dioxide costs are void (section 8(1) CO2KostAufG); where the tenant supplies themselves, the landlord likewise reimburses 50% (section 8(2) CO2KostAufG). The Act itself announces in section 8(4) CO2KostAufG that the equal split will "be replaced in 2025 by a step model for non-residential buildings". That step model is still not in the Act — the Annex applies expressly to residential buildings only. Anyone reading the announcement in a guide as current law is expecting a table that does not exist.

What 2028 and 2029 change for new gas heating

If a heating system fired with gas, heating oil or LPG is newly installed in an existing building after 29 July 2026, the owner must under section 43(1) of the Building Modernisation Act (Gebäudemodernisierungsgesetz, GModG) secure a rising share of green fuels: at least 10% from 1 January 2029, 15% from 2030, 30% from 2035 and 60% from 2040. For exactly these systems, the step model no longer applies:

The direction of this change is not clear-cut, and that is rarely said: an unrenovated building above 52 kg bears 95% today and would move to 50% with a new gas boiler from 2028 — the share falls, paid for with the quota obligation under section 43(1) GModG and half of its additional cost from 2029. An efficient building at 15 kg, by contrast, worsens from 10% to 50%. The sequence — insulate first and replace the boiler later, or the other way round — therefore changes not only the investment sum but recoverability for years to come.

The real risk sits in the statement

The landlord must disclose three things in the heating cost statement: the tenant's share of the carbon dioxide costs, the classification of the building, and the basis of calculation (section 7(3) CO2KostAufG). If the allocation is missing, or these details are, the tenant may reduce the heating costs attributable to them by 3% (section 7(4) CO2KostAufG). That is little — but it comes on top of the far harsher reduction right in the Heating Costs Ordinance: where billing is not consumption-based, it is 15% under section 12(1) sentence 1 HeizkostenV (the German text uses the older statutory wording „15 vom Hundert").

Both reductions presuppose a statement that arrives on time in the first place. The twelve-month billing deadline after the end of the accounting period (section 556(3) sentence 2 BGB) and the preclusion of tenant objections twelve months after receipt (section 556(3) sentences 5 and 6 BGB) apply here as to any other service charge item — more on this in our article on the service charge statement deadline.

What the courts have decided

There is as yet no decision of the Federal Court of Justice (Bundesgerichtshof, BGH) on the CO2KostAufG itself — the Act has only applied since 2023, and the first statements are only now reaching the courts. The two judgments below concern precisely the framework in which the CO2 share is billed: the heating cost statement and the economy principle.

BGH, default judgment of 12 January 2022 – VIII ZR 151/20 (guiding-principle decision)

The guiding principle: "Von einer nicht verbrauchsabhängigen Abrechnung im Sinne von § 12 Abs. 1 Satz 1 HeizkostenV ist auch dann auszugehen, wenn zwar die Wohnung über Heizkostenverteiler und Warmwasserzähler, jedoch die verbundene zentrale Wärme- und Warmwasserversorgungsanlage nicht über den nach § 9 Abs. 2 Satz 1 HeizkostenV vorgesehenen Wärmemengenzähler verfügt." In other words: billing counts as not consumption-based — and the reduction right is triggered — not only where nothing is metered at all, but already where a single required heat meter is missing from the installation, a component many owners assume the metering service provider fitted anyway. For the CO2 item that means: whoever discloses the allocation properly but has not fully metered the plant has the bigger problem elsewhere in the same statement.

BGH, judgment of 20 May 2026 – VIII ZR 6/24 (guiding-principle decision)

Because the CO2 cost depends on the fuel purchased, the objection that the landlord bought too dearly is an obvious one. The senate has now sharpened the test: "Das Wirtschaftlichkeitsgebot (§ 556 Abs. 3 Satz 1 Halbs. 2 BGB) ist nicht schon dann verletzt, wenn der Vermieter vor der Beauftragung von Leistungen, deren Kosten er im Rahmen der Betriebskostenabrechnung auf den Mieter umlegt, keine Vergleichsangebote einholt." The decisive point is first that objectively excessive prices were in fact commissioned. Also in the guiding principle: the preclusion of objections under section 556(3) sentences 5 and 6 BGB applies in principle to this objection too — a tenant who lets the twelve-month period lapse cannot raise it later.

Frequently asked questions

Is it living space or usable floor space that counts?

Living space. Section 5(1) CO2KostAufG refers expressly to kilograms of carbon dioxide "per square metre of living space per year". Where the landlord supplies several flats separately, their combined living space is decisive.

How is it rounded — and why is that worth a look?

To one decimal place (section 5(1) sentence 3 CO2KostAufG). Because the band boundaries sit at round values, that rounding decides 10 percentage points in a borderline case: 31.96 becomes 32.0 and therefore the next band.

Does the Act apply to an all-inclusive rent?

In the exceptional cases of section 11 HeizkostenV — for instance buildings with a heating demand below 15 kWh/(m²·a), or old people's and nursing homes — the CO2KostAufG does not apply, unless the parties have agreed on a statement of heating and hot water costs (section 2(7) CO2KostAufG). For two-flat buildings in which the landlord occupies one flat, the agreed billing route applies (section 7(2) CO2KostAufG).

Is the landlord share tax deductible?

Yes. It is an expense caused by the letting and therefore a deductible expense (Werbungskosten): "Werbungskosten sind Aufwendungen zur Erwerbung, Sicherung und Erhaltung der Einnahmen" — expenses to acquire, secure and maintain income (section 9(1) sentence 1 of the Income Tax Act, EStG). It belongs in the same category as the other non-recoverable service charges — with the difference that its size depends on the building's energy condition and is therefore plannable.

What does this have to do with the heating law?

The 2028 and 2029 deadlines hang on the installation of a gas or oil boiler under section 43 GModG. Which other deadlines attach to the heating system is covered in our article on the heating law and landlord deadlines.

See the non-recoverable share where it takes effect

RenoDiary keeps recoverable and non-recoverable operating costs separate per property and unit, feeds them into the cash flow and holds maintenance expenses ready for the Anlage V tax schedule — including the items that depend on the building's energy condition.

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Sources

This article offers general orientation and does not replace individual tax or legal advice within the meaning of section 3 of the German Tax Advisory Act (StBerG). The relevant certificate price from 2027 onwards is only fixed once the Federal Environment Agency publishes it; the worked examples use the midpoint of the price corridor laid down by statute for 2026 and leave VAT out of account. Whether a reduction under section 9 CO2KostAufG applies in an individual case depends on the specific requirements of public law for the building concerned.