Employee housing: economic, legal and tax aspects at a glance

• Employee apartments are residential units that companies usually rent out to their employees at a reduced rate or free of charge.
• For companies in urban conurbations and for industrial companies, which often already have land or building sites, investing in employee housing makes sense. However, renting residential space is also an option.
• By providing support in finding accommodation and relocating, employees can concentrate on their tasks from day one and often show a higher level of emotional attachment to the company and active commitment.


• Corporate Real Estate Management (CREM) plays an important role in the realization of employee housing. Among other things, it is responsible for:
• Coordinating the needs of the company and employees
• Support and realization of planning and implementation
• Business assessment of the various design options for employee housing

Employee apartments offer considerable tax benefits. Taking all the subsidy options together, companies can claim up to almost 40 percent of the acquisition and production costs of the building as tax depreciation within four years. If the respective requirements are met, the following depreciation options are available for residential properties:

• Regular annual building depreciation of 2 percent, 3 percent for new buildings OR: 5 percent declining balance building depreciation.
• For the creation of new living space (new buildings, conversions): 20 percent special depreciation, spread over four years.

Employees also benefit from tax concessions if they are provided with an apartment at a reduced rate.

• If the rent is at least two thirds of the local comparative rent, no non-cash benefit is assumed. The difference saved compared to the local comparative rent (up to a maximum of 25 euros per square meter) therefore remains free of tax and social security contributions.

The employee housing models - new construction, conversion, rental - each have different legal consequences. The following aspects, among others, are relevant:

• Drafting the tenancy agreement: Tenancy agreements with employees differ from regular tenancy agreements, particularly with regard to the termination provisions.
• Work-rental versus work-service housing: While the employment and tenancy relationship is regulated in two separate contracts in the case of work-rental housing, the provision of housing in the case of work-service housing is part of the consideration for the employee's work performance.
• When building or converting residential space in the vicinity of a company, not only must planning permission be applied for, but often development plans must also be amended or newly adopted. It may also be necessary to conclude additional agreements with the municipality.
• In the case of cooperation with housing associations, hotels, other accommodation providers or - even more rarely - specialized providers of corporate housing, further contracts are concluded that regulate differentiated occupancy rights for short-term apartment rentals or permanent tenancies.

Housing can create incentives for both recruitment and employee retention:

• The availability of affordable housing makes the company very attractive to many employees and applicants.
• Once the housing issue has been resolved, employees can concentrate better on their tasks.
• Many companies have already found that employees perform better when they no longer have to worry about finding accommodation.

In addition, by offering housing, companies assume social responsibility, improve their image and achieve sustainability goals:

• Relief for the housing market
• Assuming social responsibility
• Sustainable building use