Limitation Periods under German Law

Key Takeaways

1. Under German law, the applicable limitation period depends on the type of claim. Although there is a default standard limitation period of three years applying to most claims, German law provides for shorter or longer periods for specific claims.
2. The standard limitation period begins at the end of the calendar year in which both the claim exists and the creditor knows about (or should have known) the relevant facts and the debtor’s identity.
3. Discussions about claims can toll an ongoing limitation period, resulting in the claim not becoming time-barred unless it is clear and unequivocal that the debtor refuses to pay.
4. Limitation is understood as a question of substantive law and must be actively raised as a defense by the debtor.

What are limitation periods under German law?

Limitation periods (“Verjährung”) restrict the enforceability of legal claims and determine a certain period of time after which the debtor is entitled to refuse fulfilment of an obligation.

Which limitation period applies to a claim?

Sec. 195 of the German Civil Code (“Bürgerliches Gesetzbuch” – “BGB”) establishes a period of three years as the default standard limitation period. Certain claims are subject to different limitation periods, particularly:

• two years: claims for defects in purchased goods (Sec. 438 (1) (3) BGB) or inadequate performance of a contract to produce a work (Sec. 634a (1) (1) BGB);
• ten years: claim to the transfer of ownership of real estate (Sec. 196 BGB);
• thirty years: e.g. judicially determined claims and certain personal injury claims (Sec. 197 BGB).

When does the limitation period start?

The default standard limitation period generally starts only at the end of the relevant calendar year (i.e. close of 31 December) in which (Sec. 199 (1) BGB):

• the claim arose, meaning that the creditor, debtor, and subject matter of the claim can be identified; and
• the creditor has knowledge, or was grossly negligent in failing to have knowledge, of the facts giving rise to the claim and the identity of the debtor.

As a result, the limitation period for a claim arising in 2026 does not necessarily have to begin in 2026 if the creditor is unaware that they may have a claim. As a further consequence of this rule, if both conditions are met earlier in the year (e.g. March 2026), the limitation period does not commence immediately, but only upon close of 31 December 2026 and ends on 31 December 2029.

For claims under other limitation periods, the limitation period can begin immediately upon the claim arising or other conditions being met (e.g. upon delivery of purchased goods, Sec. 438 (2) BGB).

When does a claim subject to the standard limitation period become time-barred even if the creditor is unaware of it?

Since Sec. 199 BGB provides as the second condition for the commencement of the limitation period that the creditor become aware of the facts giving rise to the claim, a claim might not become time-barred until several years after it arose, and the debtor correspondingly has no certainty of being released from their obligation (and e.g. whether there is a need to further preserve evidence). German law resolves this uncertainty by means of absolute limitation periods that apply regardless of the creditor’s knowledge. Most claims subject to the standard limitation period therefore become time-barred no later than ten years after they arose (Sec. 199 (4) BGB).

What are the effects of the limitation period expiring?

Once the limitation period expires, the debtor will have a defense and be entitled to refuse performance (Sec. 214 (1) BGB). However, if they fulfil their obligation (e.g. make a payment) without realising that the limitation period has expired, they cannot retroactively raise the limitation defense and reclaim the amount paid after they became aware of the claim having been time-barred. Moreover, even if the debtor raises the limitation defense, a time-barred claim may still be used to defend against counterclaims by the debtor, as the claim – even if it cannot itself be actively enforced anymore – can still be effectively set off against such counterclaims and can give rise to rights of retention (Sec. 215 BGB).

How can the limitation period be suspended?

Formal legal proceedings will toll the limitation period (Sec. 204 BGB). Moreover, under Sec. 203 BGB, the limitation period is suspended if the creditor and debtor enter into “negotiations”. The German courts interpret “negotiations” widely and will, in principle, let any exchange of views suffice unless the debtor makes clear that they will not comply with the obligations. If the negotiations stall – that is, if there is no further response after a period of time by the end of which a further response could have generally been expected – the suspension of the limitation period ends. However, after the limitation period commences again, the claim becomes time-barred no earlier than three months after the negotiations ended. In practice, this rule gives rise to considerable uncertainty, particularly in a business context in which the parties may still be attempting to amicably resolve their dispute.

The period during which the limitation period was suspended is not counted towards the end of the limitation period and is added to its total duration (Sec. 209 BGB).

Can parties contractually modify limitation periods?

Contractual modifications regarding limitation periods, including tolling agreements, are generally allowed under German law as long as statutory restrictions and mandatory rules are respected. For example, the limitation period cannot be shortened in advance in case of liability for intent (Sec. 202 (1) BGB). There are also restrictions on the shortening of the limitation period for claims resulting from certain types of contracts, such as rights under a contract for the sale of consumer goods regarding defects (Sec. 476 (2) BGB). Moreover, shortened limitation periods in standard terms can fall foul of the law of standard terms, which, under German law, applies even as between businesses.