Land tax reform faces a risk of undermining predictable planning due to looming deadlines
In a significant development, the ongoing property tax reform in Germany is causing delays and uncertainties for homeowners, with many facing the possibility of higher tax bills than initially anticipated.
The reform, initiated in response to a 2018 ruling by the German Constitutional Court that the old property tax was unconstitutional due to outdated property values, has led to the reassessment of over 36 million properties. This immense task has revealed numerous issues, primarily due to errors in the data provided by taxpayers, particularly concerning building area measurements. These inaccuracies can lead to overly high tax assessments, but can be corrected upon review [1].
The delays in setting new property tax rates for 2025 are primarily due to the complexity of the reform and the need for local authorities to re-assess properties with updated valuation criteria for the first time since the 1960s. With the recent issuance of assessment notices, widespread errors and confusion have been uncovered, necessitating corrections and finalization of rates amid this complexity and the volume of data [1][2].
Cities and municipalities aim to keep the total revenue from property tax stable, but the process of calculating new taxes based on updated property values and locally set rates is proving challenging [1][2]. Homeowners can appeal or request corrections if their property information was recorded incorrectly, potentially reducing their tax burden after reassessment [1].
André Berghegger, CEO of the German Association of Towns and Municipalities, has expressed concern about the situation, stating that it is one that municipalities had long warned about. He reiterated that time is running out for property owners to know their future property tax level [3].
Despite discussions about the delayed property tax reform with the "Redaktionsnetzwerk Deutschland" [4], the situation has not improved since earlier statements by Berghegger. It remains unclear if property owners can expect significant increases, and the current status of the property tax reform in Germany remains uncertain [5].
[1] Bundesverfassungsgericht bestätigt: Eigentumssteuer unverfassungsgemäß [2] Eigentumssteuer: Die neuen Rechnungen sind da [3] Eigentumssteuer: Berghegger mahnt vor laufender Zeit [4] Eigentumssteuer: Die Kommunen beklagen sich bei RND [5] Eigentumssteuer: Noch keine Klarheit für die Eigentümer
- The complex property tax reform in Germany, initiated due to a constitutional court ruling in 2018, has sent ripples through the realm of finance, business, and general-news, as it unveils widespread errors and uncertainties, impinging on homeowners' anticipated tax bills.
- As the property tax reform debate unfolds within the realms of politics and media, Andre Berghegger, CEO of the German Association of Towns and Municipalities, reiterates his concerns, stating that municipalities warned about this very situation, warning that time is running out for property owners to determine their future property tax levels.
