How is the property tax coming along?

With the exception of Bavaria, the surveys of citizens' data on land ownership have been completed everywhere. The southernmost German state has once again granted deferral. The property tax reform and the involvement of property owners was the excitement topic of 2022 throughout Germany. Now it's the turn of the tax offices.

In 2018, the Federal Constitutional Court had declared the old system of property tax valuation unconstitutional, as it treated similar properties differently. The German federal government reorganized the property tax and proposed the so-called federal model for this purpose. Federal states that did not want to adopt this model, such as Bavaria and Hamburg, were able to introduce their own property tax model on the basis of a corresponding amendment to the Basic Law.

The unwelcome obligation to provide information had led to refusal or at least delays among citizens in many places. The declaration to establish the value of real estate tax was originally set to expire on October 31, 2022. However, only very few tax returns had been received by this date. Therefore, the deadline was extended to January 31, 2023. However, even after the extended submission deadline, the property tax declaration is still outstanding for a quarter of the properties.

The tax authorities in the various German states are still at odds over how to deal with delinquent taxpayers. Overall, some leniency is expected from all sides. The tax offices want to write to delinquent property owners and point out the possible consequences. In principle, the offices can levy late payment penalties and penalty payments. The submission of the property tax return is unavoidable. Anyone who has hesitated so far should now take action and seek assistance.

The real estate tax reform in Germany is intended to revalue real estate assets and, at the same time, is being used as an opportunity to make real estate tax law digitalizable and thus more efficient. However, the implementation of the intended digitization measures in the offices is also proceeding only slowly. Only the legal and tax consulting sector has already completed the planned measures.

(Photo: © BMF, Federal Ministry of Finance, Hendel, Berlin, 2023)