Brief update on the property tax reform

Review oft he Property Tax Reform

The Federal Constitutional Court declared the previous calculation basis for determining property tax unconstitutional. The court ruled that there was discrimination against property tax payers due to the outdated basis for the unit values of properties, relying on data from 1935 for East Germany and 1964 for West Germany. As a result, approximately 36 million property owners must now have the calculation basis for property tax recalculated.

All property owners are legally obligated to comply with the recalculation of their properties through a property tax declaration. They are supported in this process by information letters that have already been sent to all private property owners by the tax authorities.

Current Status oft he Property Tax Reform:

The submission deadline ended nationwide – except for Bavaria – on January 31, 2023 (or April 30, 2023). According to a spokesperson for the Federal Ministry of Finance, approximately 75% of nationwide property tax declarations were submitted by the end of January 2023. In general, property tax declarations had to be submitted electronically through the Elster portal. However, about 10% of the submitted property tax declarations were still made on paper forms.

Due to doubts about the constitutionality of the new valuation rules for real estate and land as part of the property tax reform, sample proceedings for judicial clarification are already underway. Besides the proceedings of the Taxpayers Association of Baden-Württemberg and the Homeowners' Association of Baden-Württemberg within the state itself, the German Taxpayers Association and Home & Property Germany will jointly file lawsuits against the federal model, which applies in eleven states. Judgments are expected in the coming years. Therefore, it is recommended to file a precautionary objection against the property tax assessment notice. The objection period is one month from the receipt of the tax assessment.