Property tax

In its decision of 10 April 2018, the Federal Constitutional Court declared the current property tax to be unconstitutional. As a result, the Federal Government was forced to enact a new regulation of the property tax by 31 December 2019. This will come into force on 1 January 2025. The revaluation of land will take place for the first time on 1 January 2022.

>> Every owner of real property is therefore obliged to electronically submit the declarations required for this purpose to the competent tax office for the determination of real property tax values as of 1 January 2022 in the period 1 July to 31 October 2022. <<

The new regulation reforms

• Land tax A (agricultural use),
• property tax B (building land), and
• introduces a new land tax C (land ready for construction).

The Land Tax Reform Act contains an opening clause that allows the individual federal states to develop their own land tax models for Land Tax B and to decide for themselves which changes to Land Tax A and C they wish to adopt.

Land tax A is reformed to the effect that residential buildings located on land used for agricultural and forestry purposes are no longer taxed with land tax A, but with land tax B. The new taxation system is based on the principle of the “taxation of land”. In addition to the federal model, there are now five other models for the calculation of land tax B. The federal states of Berlin, Brandenburg, Bremen, Mecklenburg-Western Pomerania, North Rhine-Westphalia, Rhineland-Palatinate, Saxony-Anhalt, Schleswig-Holstein and Thuringia have joined the so-called federal model and, in a modified form, Saxony and Saarland. The remaining federal states have developed their own model, but they are all very similar.

The introduction of the taxation of land ready for construction with property tax C should lead to the creation of more living space.

With so many changes, especially due to the different models, it is easy to lose track of which data is needed for which types of declarations in which federal states.

To help you keep an overview, we will be happy to assist you in preparing the declaration for the determination of property tax values for 1 January 2022. Contact us.