Property tax reform enters the next phase

In the next phase of the property tax reform, all property owners are now called upon. Between 1 July and 31 October 2022, they must submit a tax return electronically, on the basis of which the new property tax will be calculated. The return requires information on the property and the taxpayer, including the tax number, information on co-ownership shares (for condominiums), the land register number, the parcel number and the area sizes.

In April 2018, the Federal Constitutional Court called on the legislature to revise the assessment of property tax. This had become necessary because until then it had still been based on ancient property values, the so-called standard values of 1964 in the West and 1935 in the East. The new law was passed in November 2019. Implementation must be completed by 2025. 

How high the tax will be in the future cannot be said uniformly. Because the proposed federal model was controversial due to its complexity, the federal states were able to develop their own models by means of an opening clause. Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony made use of this possibility. In Saarland and Saxony, the federal model was only slightly modified. The following applies to all of them: The required information refers to the ownership situation as of the first of January 2022. 

In almost every federal state, therefore, something different applies. According to the federal model, the tax offices calculate the first value using the electronically submitted data. This is then multiplied by the tax assessment figures. In the end, the municipalities use the assessment rate to determine how high the burden is on each individual property owner. The municipalities are entitled to the revenue from the property tax. So far, this has amounted to about 15 billion euros. The revenue as a whole is to remain the same, but the tax burden will shift. Residential use will become more favourable compared to commercial use; single-family homeowners with large plots of land will probably have to pay more than residents of a condominium.

(Photo: © Michael Gaida, Pixabay)