"The now planned valuation of owner-occupied commercial properties using an asset valuation method will require, in some cases, extensive collection of building data and additional disclosure obligations from the owners, which will entail considerable costs for the trade," explains Holger Schwannecke. (Photo: © Rupert Trischberger/123RF.com)
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The Bundestag has approved the property tax reform. The ZDH (Federal Office for the Development of Real Estate Taxes) has criticized the opportunity for a low-bureaucracy amendment, claiming it has been missed.
The draft law on property tax passed by the Bundestag squanders an opportunity for a less bureaucratic reform . The skilled trades sector is angered by the additional bureaucracy that the amendment would create, leading to a higher financial burden for businesses. "Instead of agreeing on a simple area-based method, the decision was made to use the significantly more complicated asset-based valuation method, which will entail additional obligations and costs for our businesses," said Holger Schwannecke, Secretary General of the German Confederation of Skilled Crafts.
According to the federal government, the new property tax is scheduled to take effect on January 1, 2025. The reform became necessary because the Federal Constitutional Court last year declared the tax authorities' method of calculating property taxes on houses and undeveloped land based on standardized values unconstitutional and demanded a new legal framework by the end of 2019. The now-adopted package consists of three interconnected draft laws designed to bring property tax and valuation law into compliance with the constitution.
Property tax will continue to be calculated in three steps (assessment, tax base, municipal tax rate). However, several factors will now play a role in the calculation: standard land value, the statistically determined net rent, plot size, property type, and the building's age. "Particularly for the now-planned valuation of owner-occupied commercial properties using a cost approach, extensive building data collection and additional reporting obligations for owners will be required, which will entail considerable costs for the relevant tradespeople," explains Schwannecke.
Furthermore, there are other detailed problems, such as the legal verifiability of the standard land values or the consideration of factors influencing value. Schwannecke is also critical of the opt-out clause included in the draft law , which allows the federal states to apply significantly simpler and less bureaucratic models. He fears that this will lead to legal fragmentation . Moreover, he worries that some states could use this option over time to introduce even more complex and costly valuation procedures, which could prove to be a disguised wealth tax on land.
"The skilled trades sector therefore appeals to the federal states to implement less complex regulations than the plans presented by the Federal Ministry of Finance ." It is a positive development that property owners in states with a simpler valuation model do not have to perform additional shadow calculations for the purpose of fiscal equalization between the states. "It is incomprehensible why there is still a insistence on introducing a property tax C , which has already proven ineffective in the past. This will create new bureaucratic burdens. Moreover, it creates a very problematic conflict with Article 14 of the Basic Law."
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