In Germany, monetary claims expire after a defined period, making recovery nearly impossible once this timeframe has passed. Businesses must understand their rights and obligations to pursue outstanding amounts promptly and avoid losing the ability to collect.

This article explains which limitation periods apply in the country and when they take effect. We’ll also take a deep dive into how a business’s bookkeeping affects these legal deadlines, especially regarding depreciation, adjustments to value-added tax (VAT), and the management of limitation periods.

What’s in this article?

• What are the statutes of limitations in Germany?
  
• When does the limitation period start?
  
• Are there any special cases when it comes to limitation periods?
  
• What role does dunning play in the limitation of claims?
  
• What impact does the limitation of claims have on a business’s bookkeeping?
  

What are the statutes of limitations in Germany?

In Germany, the German Civil Code (BGB) sets the rules governing the expiry of monetary rights. Different types of claims are subject to different limitation periods. Most of these cases are subject to a standard three-year statute of limitations according to § 195 of the BGB. Typical examples include outstanding bills, contractual claims, rent and lease entitlements, wage and salary claims, and demands arising from loans or damages.

Once the three-year window ends, the debtor is entitled to refuse payment. This rule aims to maintain legal certainty, as older claims are often harder to substantiate—documents might disappear, and witness testimony becomes less reliable. If the debtor does not invoke the limitation period, creditors can still pursue legal action. In some situations, Schufa could keep existing entries on a borrower’s credit file after the time limit has expired, but it cannot add new entries for debts that have already lapsed.

When does the limitation period start?

Per § 199.1 of the BGB, the standard limitation period begins at the end of the year in which the claim arose. Imagine a business issues an invoice in January 2026 and the customer fails to pay it. In that case, the statutory deadline runs from December 31, 2026 to December 31, 2029—provided, of course, the parties have not agreed on a different timeframe. Secondly, the creditor needs to know, or be capable of learning, what their claim is, their substantiated reasons, and the identity of the obligor.

However, as the following examples show, in some cases it can be challenging to say exactly at what point a right to payment lapses:

Example 1

A photographer purchases a camera in November of 2025 for €1,500. They do not receive the corresponding invoice until January 2026. Due to a typo, the photographer only transferred €150 to the seller at that time. However, accounts do not notice this oversight until the summer of 2029. Now, the company is demanding €1,350 from them.

By now, the company’s entitlement has lapsed, as it arose in 2025, when the photographer purchased the camera. Here, the limitation period begins on the purchase date rather than the invoice date. The reason is the company could already have issued the invoice at the end of 2025. Exemptions to this principle do apply, such as for doctors’ or architects’ fees.

Example 2

In January 2025, a financial advisor recommended an investment in a real estate fund to a client. The client receives a detailed prospectus describing every risk, including the possibility of losing all the money invested. They decide to go ahead anyway. A few years later, the fund becomes insolvent, and the client loses the full amount of the capital they put in. They are now seeking damages for bad investment advice.

Their right to damages began in January 2025, when they received the advice. Yet it is unclear at which point the statutory deadline started running: in 2025, when they received the prospectus; in 2026, after they decided that their investment had fallen significantly in value, or when insolvency became apparent. The limitation period does not begin until the creditor knew or could reasonably have known of the circumstances underlying the demand. In this instance, what matters is the moment the client knew or ought to have realized that they had suffered damage on account of the advice.

Can the limitation period be extended?

In some cases, where the legal situation is unclear, the limitation period could start running later than usual. If the creditor is unable to estimate with any certainty whether a claim is likely to succeed, then they cannot reasonably be expected to sue immediately. The German Federal Court of Justice confirmed this in its judgment of November 11, 2021 (Case no. IV ZR 113/20).

Are there any special cases when it comes to limitation periods?

In addition to the general three-year limitation period, the BGB also contains several other provisions that stipulate shorter or longer timeframes for specific types of claims. These periods vary depending on the nature of the claim and the particular circumstances in which it arose. Below, you will find some of the most important regulations:

Six months

Claims arising from tenancies are subject to a particularly short deadline of six months. This limitation period applies, in particular, to claims brought by landlords for damages, such as when a tenant causes damage to an apartment or fails to carry out agreed cosmetic repairs. The time limit kicks in once the tenant returns the rental property.

Two years

If a product proves defective, customers have two years to demand a remedy. This limitation period starts on delivery or handover.

The same two-year rule applies where a contractor undertakes repair or maintenance work on a product. The limitation period begins as soon as the works are accepted.

Travelers’ claims also lapse after two years. This timeframe applies to entitlements arising from all-inclusive getaways and usually runs from the end of the vacation.

Five years

The limitation period for claims related to building defects is five years. These actions target building firms and architects for complaints that surface during conversions or renovations. The time limit takes effect once the works are accepted. Warranty claims for real estate purchases are also valid for five years.

Ten years

For real estate rights—such as entitlements arising from a mortgage—the limitation period is 10 years. The time limit is calculated from the date on which the claim arises, rather than the end of the year.

Thirty years

Some claims only lapse after a full 30 years under German law. These include actions based on intentionally injuring a person’s life, limb, health, freedom, or sexual self-determination. In such cases, the statutory period starts when the claim arises, usually on the day the damage occurs.

Demands to surrender property, claims arising from enforceable judgments or from binding records or documents, and rights to reimbursement of the costs of compulsory enforcement are also valid for a full 30 years.

To avoid nonpayments, businesses need to regularly check the relevant limitation periods for items recorded in their ledgers.

What role does dunning play in the limitation of claims?

Dunning letters explicitly remind people who owe money of outstanding obligations, and can help businesses collect on what is owed. Dunning keeps the claim top of mind for the debtor, thereby increasing the likelihood of payment. That said, these reminders do not affect the limitation period.

Things work a little differently if both sides enter into negotiations over the debt. Under § 203 of the BGB, ongoing talks pause the limitation period until one of the parties terminates the discussions. In practice, this legal clock remains suspended for the duration of these conversations and is extended accordingly. By contrast, sending a dunning letter does not in itself constitute entering into negotiations in any legal sense.

Creditors can enforce these rights in court before the limitation period expires. There are two options here: suing or obtaining a default summons. Default summons is a simplified proceeding in which the person owing money can file an objection. Failing this, the applicant receives a default judgment, enabling them to engage the services of enforcement agencies.

If a creditor files for a default summons, the legal deadline stops running at that point. If the creditor does not proceed with their case, the clock resumes no later than six months after the most recent activity.

What impact does the limitation of claims have on a business’s bookkeeping?

These statutory limits under § 195 of the BGB have far-reaching implications for corporate accounting. If a receivable proves uncollectable, businesses must show that loss in their balance sheet and profit-and-loss accounts.

Depreciations and amortizations

If it becomes clear that an open invoice will remain unpaid—because it has lapsed or the debtor is insolvent, for example—the amount has to be adjusted in the books. This adjustment takes the form of depreciation or amortization.

Businesses have to bring receivables on their balance sheet down to the sum that is realistically recoverable. This figure then flows into the profit-and-loss account as expenditure. Organizations must ensure that these types of depreciation are posted correctly in accordance with commercial law regulations, as they affect overall profit—and, therefore, its tax burden.

VAT corrections

A VAT correction adjusts the VAT paid initially on an invoice that proves uncollectible. If a company has already sent VAT to the tax office for a receivable that later lapses, § 17 of the German VAT Act (UStG) requires a correction. This adjustment occurs in the calendar year when the receivable moves to uncollectible status. To receive a refund or reduce its tax burden, the company must indicate the change on its preliminary VAT return.

Managing limitation periods

Before a limitation period expires, businesses have to ensure they enforce unpaid invoices in a timely manner and for the full amount. The dunning process plays a key role here. Stripe Invoicing can help businesses by automating invoicing and sending payment reminders. Administrative processes run in a structured way, giving you a clear view of outstanding items and every deadline while stopping claims from lapsing.

Factoring

Receivables that lapse also affect a business’s liquidity and cash flow. When open items remain unpaid, the company forgoes part of its earnings, which negatively impacts its solvency. Some organizations might consider selling receivables to avoid belt-tightening. Known as “factoring,” this move can help you stabilize cash flow.