Judgement on property tax: Suspension of enforcement
Published on: , by
There seems to be no end to the discussion about the reform of property tax. In Berlin, Rhineland-Palatinate and North Rhine-Westphalia, Haus & Grund Deutschland and the German Taxpayers' Association (BdSt) are supporting legal action before the fiscal courts. The Federal Fiscal Court (BFH) has now issued its first judgement.
In 2018, the Federal Constitutional Court declared the old legal situation regarding the valuation of properties to be unconstitutional. Property tax and valuation law had to be reorganised by the Property Tax Reform Act. Each federal state had the choice of calculating property tax according to the federal model or its own valuation model.
Two important judgements on the subject of property tax have now been handed down within the space of just two days. The Baden-Württemberg tax court has dismissed two lawsuits against the so-called land value model in Baden-Württemberg. According to the land value model, only the area with the new standard land values counts, but not what is on it. From 1 January 2025, large apartment buildings or villas could be subject to the same property tax as small detached houses. The court declared it permissible for property tax to only be levied on the land, but not on the buildings on it.
Two days later, the BFH also dealt with property tax, but - unlike in Baden-Württemberg - with the determination of property values according to the so-called federal model. On 27 May 2024, the BFH ruled in two proceedings that taxpayers must be able to prove a lower value of their property than the assessed property value in individual cases under certain conditions. The legislator has a wide scope for flat-rate assessment. However, the prohibition of excessiveness may be violated if the assessed property value proves to be significantly excessive. This presupposes that the established value exceeds the proven lower value by 40 per cent or more.
The BFH has not ruled on the constitutionality of the new valuation law. A final decision will probably only be made by the Federal Constitutional Court.
(Photo: © Federal Fiscal Court, Daniel Schwarcz)