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Property tax reform

Real estate law

Property tax reform

In Germany, property tax is levied by the cities and municipalities in whose territory the property is located, and the revenue also accrues exclusively to the cities and municipalities.

In its ruling of 10 April 2018, the Federal Constitutional Court declared the statutory regulations on land tax to be incompatible with the principle of equality of the Basic Law. The decisive factor for the ruling was the unequal tax treatment of real property due to the failure to update the bases of taxation over a long period of time.

Following the ruling of the Federal Constitutional Court, the land tax must be reorganised. The previous standard values, which have remained unchanged for decades, must be replaced by a new basis of assessment from 2025.

All owners - whether of small flats, large houses, developed or undeveloped land - are obliged to submit a special tax return to the tax office this year.

The data that owners must provide in the tax return is not regulated uniformly across the country. Although the Bundestag adopted the so-called federal model in 2019, the federal states were allowed to deviate from it and develop their own system.

The declaration of the property tax assessment amount must be submitted in the period between 1 July and 31 October 2022.

The declaration must be submitted electronically via ELSTER. Only in exceptional cases may it also be submitted on paper.