German Federal Fiscal Court Raises Doubts on New Property Tax Calculation
In a recent ruling by the German Federal Fiscal Court (BFH), doubts have been raised about the calculation of the new property tax that is set to be levied on all homeowners and property owners starting from next year. The BFH ruled that owners should have the opportunity to prove that the actual value of their property is significantly lower than the value determined by the tax office. This ruling has the potential to turn the property tax issue into a matter for the Federal Constitutional Court. The Property Owners Association House & Ground along with the Association of Taxpayers have announced their intention to continue model proceedings before the financial courts, seeking a prompt decision from Karlsruhe. The Munich court did not make a definitive statement on the constitutionality of the new property tax but ruled in favor of two condominium owners from Rhineland-Palatinate in their dispute with the tax office. The BFH's ruling highlighted concerns about the current property tax assessment values being detached from reality in many places and their incomprehensible derivation. While tax offices are allowed to make general assumptions for the calculation of more than 36 million properties and buildings across Germany, owners must have the opportunity to challenge the values if they deviate significantly from the actual value. The BFH mentioned a deviation of around 40 percent as a threshold for owners to prove the inaccuracy of the calculated values to the tax office. Some states like Bavaria have opted to use their own simpler evaluation model for property tax. This ruling by the BFH indicates a potential shift in the landscape of property taxation, prompting discussions on how property owners can strategically navigate these changes and potentially save on taxes.
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