Berlin It was just too much. Property tax information for 7000 properties and buildings, more than 13,000 sub-areas, plus the question of whether forest areas need to be re-measured. “We can’t afford that at the moment,” says Jena’s city spokesman Kristian Philler.
Jena therefore asked the Thuringian state finance ministry for a postponement of the property tax return and got it: instead of October 31, the city now has until December 31 to submit its property tax returns.
Jena is not an isolated case. Not only citizens, but also the approximately 11,000 municipalities in Germany each have to submit thousands of property tax returns. The first cities have now capitulated and received an extension of the deadline – which the state has so far denied normal taxpayers.
The extension of the deadline shows the whole insanity of the property tax reform: The state itself is not able to submit its property tax returns by the deadline it set itself, but expects exactly that from its citizens.
In 2019, the grand coalition passed a property tax reform following a ruling by the Federal Constitutional Court. Three years later, citizens and companies are feeling the consequences immediately. Since July 1, they have been called upon to submit a new property tax return within four months; the deadline ends on October 31. From 2025, the new property tax should take effect.
Also overburdened by the state
Karlsruhe had judged that the tax violated the principle of equality because the calculation was still based on values from 1964 (West) and 1935 (East). However, the properties have developed differently in value over the decades. Therefore, all properties must now be revalued.
Since the submission deadline began, many citizens and companies have been annoyed. Completing the tax return is very time-consuming because citizens and companies have to collect all the documents themselves from government agencies, associations complain.
At the same time, thanks to the reform, the federal states could adopt their own property tax model, if they so wished, of which five have made use. The remaining eleven rely on the federal model. That too leads to chaos.
Even the state struggles to meet its own requirements. An exact number of how many properties in Germany are in municipal ownership is not available. But a city like Munich alone has 1,800 property tax returns.
While Munich believes it can meet the property tax deadline, Jena is overburdened with filling out all property tax returns in just four months, city spokesman Philler explains. There is simply a lack of staff. Because many civil servants in the municipal offices are already busy with the energy and refugee crisis.
“Everybody who knows about land, about buildings and about the problems there are involved in housing Ukrainian refugees,” says Philler.
>> Read here: This is how you keep track of the property tax chaos
Therefore, the city is “very grateful” that the Thuringian Ministry of Finance has agreed to an extension of the deadline. In addition to Jena, Weimar has now also received an extension of the deadline until the end of the year, and Erfurt has also applied for an extension of the deadline.
In the East especially a lot of effort
The problem can also be seen in the German Association of Towns and Municipalities. Its deputy general manager Uwe Zimmermann explains: “It is true that the submission of property tax returns in the now protracted crisis situation is an additional challenge for municipalities.” However, the cities went to this task “at high pressure and to the best of their ability”.
From 2025, the new property tax should take effect.
(Photo: dpa)
But just like for the normal taxpayer, this task is also challenging for the municipalities in different ways depending on the federal state. Especially in the east, the property tax returns for the cities and municipalities are complex.
For the first time, agricultural land is also assessed here, which must be specified with pinpoint accuracy. In addition, municipal garages and allotment gardens will also be assessed via property tax in the future. For these countless areas, however, the cities and municipalities first have to collect the data.
The Association of Towns and Municipalities is still open as to whether there needs to be an extension of the deadline for property tax returns beyond October 31st. “That is not foreseeable at the moment,” explains Zimmermann.
>> Read here: Ifo boss Clemens Fuest on the property tax chaos – “Some federal states show that there is an easier way”
Other experts, such as tax union boss Florian Köbler, consider an extension of the deadline to be overdue. “Otherwise the tax offices will collapse,” warns Köbler. The tax offices are already suffering from a lack of staff. It was “unreasonable that they should now also process laundry baskets of deadline extension requests”.
there is time pressure
And even if the year 2025, until the reform comes into force, still seems far away, there is time pressure. Because after the tax returns have been received by the tax offices, they first have to work through the whole mountain and send out the tax assessments. “We need all the property tax returns by spring at the latest in order to do this in time,” says Köbler.
And then the municipalities are asked again. The central promise of the reform is that although individual taxpayers will pay more, the bottom line is that the reform will be revenue-neutral and therefore not a real tax increase.
The municipalities should therefore adjust their municipal assessment rates for property tax – i.e. usually lower them in order to compensate for additional burdens that have arisen via a lower tax rate. It is therefore “crucial that the cities and municipalities have enough time for implementation,” demands association representative Zimmermann.
According to the head of the tax union, Köbler, the municipalities have long had to make projections and preparations to adjust the tax rates. “Otherwise, there is a risk of massive property tax increases,” he says.
>> Read here: How tax offices and politicians pass on the property tax reform to the citizens
Some cities and municipalities probably want to do just that and have already raised the assessment rates for property tax before the reform takes effect. “Many cities and municipalities will not miss the opportunity to increase property taxes,” says municipal expert Rene Geißler from the University of Wildau.
In the end, the city council decides. “And this can easily assign the responsibility for higher taxes to the federal and state governments,” says Geißler. In this way, the reform would ultimately be worthwhile for the municipalities, despite the currently immense effort.
More: How the property tax madness costs citizens money and nerves.