Architect's fee

Architect’s Fees - An architect’s fee is the compensation an architect receives for their design and supervision services. The calculation is based on the Fee Schedule for Architects and Engineers (HOAI), which defines nine service phases-from preliminary planning to project management. Since a 2019 ruling by the European Court of Justice, the minimum and maximum rates of the HOAI are no longer mandatory, but they continue to serve as a standard market framework.

Service Phases and Fee Calculation

The HOAI divides architectural services into nine service phases (LP 1-9), each of which is assigned a percentage of the total fee:

Service Phase	Content	Percentage of Fee (approx.)
LP 1-2	Preliminary planning	11%
Phase 3-4	Design and permit planning	17%
Phase 5	Construction planning	25%
Phases 6-7	Preparation and participation in the awarding of contracts	11%
Phase 8	Project supervision (construction management)	32%
Phase 9	Project support (warranty follow-up)	4%

The amount of the fee depends on the billable costs (construction costs excluding land), the fee zone (difficulty level I-V), and the agreed-upon fee rate. Simple residential buildings generally fall into fee zone III; historic existing buildings or buildings with special design requirements fall into zones IV or V.

Calculation example: Renovation of an apartment building in Nuremberg with chargeable costs of 600,000 euros, fee zone III, base rate. According to the HOAI, the total fee for all service phases is approximately 55,000 to 70,000 euros. If only service phases 1-5 and 8 are commissioned (common practice), the fee is reduced to approximately 75% of that amount-around 41,000 to 52,000 euros.

Free Agreement on Fees Since 2019

Since the ECJ ruling of July 4, 2019 (Case C-377/17), the minimum and maximum rates of the HOAI have been deemed contrary to European law and are no longer binding. Architects and clients can freely agree on the fee-even below the former minimum rate. In practice, most firms continue to use the HOAI table as a guide, as it is recognized as a fair basis for calculation.

Anyone agreeing to a flat fee or an hourly rate should define the scope of services particularly precisely in the contract to avoid subsequent additional claims. Without an express agreement, the HOAI base rate is considered the customary remuneration under current case law.

Tax Treatment of Architectural Costs

For rented properties, the tax treatment depends on the type of project:

• Maintenance expenses (renovation without significant expansion or improvement): Architect fees can be immediately deducted as business expenses-in the year of payment.
• Construction costs (new construction, addition, significant expansion): Architect fees are capitalized as part of the construction costs and depreciated over the building’s useful life.
• Construction costs incurred shortly after acquisition: If the 15% threshold is exceeded within three years of purchase, architectural fees are also included in the costs subject to capitalization.

For owner-occupied residential property, architectural fees are generally not tax-deductible, unless the property includes a home office.

Practical Tip for Property Owners in Nuremberg and Franconia

We recommend that property owners in the Nuremberg metropolitan area not base their decision solely on the lowest fee. Especially with existing properties-such as the renovation of a sandstone house in Nuremberg’s Old Town or a roof extension in Fürth-the experience of a regional architect who is familiar with local building codes, zoning plans, and historic preservation requirements pays off.

Agree on the scope of services in writing and clarify in advance which service phases will be commissioned. Phases 1-5 and Phase 8 are frequently commissioned, while Phases 6-7 (tendering and awarding) and Phase 9 (project supervision) are optional. A good architect with Phase 8 (construction management) is particularly indispensable for large-scale projects, as they act as the client’s representative to oversee construction and document any defects.

Frequently Asked Questions

Is the HOAI still binding?

The HOAI continues to exist as a regulation and is used as a basis for calculation; however, the minimum and maximum rates have not been mandatory since the 2019 ECJ ruling. Architects and clients are free to agree on the fee. In the absence of an explicit agreement, current Federal Court of Justice (BGH) case law deems the HOAI base rate to be the standard remuneration-which is often more cost-effective for the client than individual special agreements.

Can I commission individual service phases separately?

Yes, building owners can specifically commission only certain service phases-such as only the design planning (Phases 1-4) or only construction management (Phase 8). The fee is then calculated proportionally according to the HOAI percentage rates. Please note that with a phased commission, onboarding costs may arise if another firm takes over the subsequent phases-the handover know-how is lost. A single architect working continuously across all phases is generally more efficient.

Are architect fees tax-deductible?

Yes, for rental properties, architect fees are tax-relevant-either as immediately deductible maintenance expenses or as capitalized construction costs, depending on the nature of the work. We recommend clarifying the tax classification in advance with a tax advisor, especially if the work takes place shortly after purchase and the 15% limit for pre-acquisition construction costs could be relevant.

How do I choose the right architect for a project in Nuremberg?

For construction projects in Nuremberg and the metropolitan region, we recommend reviewing not only the architectural firm’s portfolio but also its local experience. Is the firm familiar with the requirements of the Nuremberg Building Authority, the Historic Preservation Office (particularly relevant for renovations of historic buildings in the Old Town, Gostenhof, or Wöhrd), and the relevant building permit authorities? Does it have experience applying for building permits with the City of Nuremberg or the districts of Nürnberger Land, Erlangen-Höchstadt, and Fürth? This local knowledge can save a significant amount of time and money. The Bavarian Chamber of Architects maintains a public directory of all licensed architects in Bavaria, listing their areas of specialization-a good starting point for your search. In addition, recommendations from local tradespeople, experts, or real estate professionals in the region offer practical insight into the actual quality of a firm’s services.

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