New market-value based property tax in Germany?
Voss, Winrich
Property-based taxes in Germany are since many years not founded on current market values. The tax-relevant property values reach about 10 - 30 % of market values. In 2006 the German Federal Constitutional Court required that the rules for property tax valuation have to be changed and based on current market values. The decision refers to the Inheritance Tax, but it is also relevant for the Local Property Tax (Grundsteuer). The new Inheritance Tax Act came into force on 01.01.2009, the revision of the Property Tax is still in discussion. The new rules are corresponding to the standard valuation methods (comparative method, income capitalization method, depriciated replacement cost method), in Germany layed down in the Federal Valuation Ordinance. The differences in valuation methods will be explained. The financial administration is asked to use the market analysis results of the Official Valuation Committees (Gutachterausschhsse), and the Valuation Committees are asked to contribute the necessary data for valuation covering all parts of the country. Different reform models discussed for a new property tax in Germany are introduced and analysed in the paper. Two aspects are most important for the financial authorities: It is not possible to estimate the value for each plot individually, mass valuation is necessary; nevertheless the results must be accurate enough, so that tax equability is guaranteed. Valuers and the Valuation Committees could play an important role and extend their competences when contributing the appropriate data and the assessment for property taxes.
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