The German Federal Constitutional Court had declared the current system of property tax valuation unconstitutional in 2018. The Reason was, that it treated similar properties differently and thus violated the requirement of equal treatment as required by the constitution (Grundgesetz). It also decided that a new legal regulation had to be adopted by 31 December 2019 at the latest.
The previous calculation of the property tax is based on decades-old property values (the so-called unit values). In West Germany, the plots are taken into account according to their value in 1964. In Eastern Germany, the underlying values are even older, based on values from 1935. These unit values are multiplied by a uniform factor, the so-called tax figure, and then by the so-called levy rate. While the tax assessment figure is determined nationwide according to the law, the levy rate – and thus ultimately the property tax amount – is determined by the municipalities.
The new system of Property Taxes in germany however is rediculous. Literally each of the 16 Laender (States) in Germany has implemented its own system to determin the value of the respective property. Therefore a similar property in Hamburg very likely will only reach a small portion of the value of its couterpart in Berlin. In Baden-Wuerttemberg property values are determined by their size and the area they are in only. Therefore a multi story building complex very well will be the same value as the old shed next door.
The whole system now is in disarray. Millions of appeals against tax assessments will lead to insecurity about the status of Property Taxes for the next couple of years, until the Federal Constitutional Court will speak again. At the same time, noone can estimate the amount of taxes he or she will need to pay once the tax is implemented, as the municipalities will decide on the levy rate in 2024 for 2025, when the new System will be in effect.
