Many cities and municipalities in Germany raised their property tax considerably in 2023. The average assessment rate rose by 18 percentage points to 409% - the biggest increase since surveys began. An analysis by the German auditing and consulting organization EY shows that more than 2,600 municipalities increased the assessment rate. Only around 50 of the municipalities made a reduction.
This increase is mainly due to the reform of the municipal financial equalization system, particularly in Rhineland-Palatinate. Many local authorities there adjusted their tax rates in order to avoid a loss of revenue. North Rhine-Westphalia and Hesse also recorded high assessment rates. Property tax B, which applies to developed land and housing, played a central role in financing public tasks in 2023 and brought in 15.1 billion euros.
From 2025, property tax will be calculated on a new basis in some federal states following a decision by the Federal Constitutional Court. The previous data for western Germany was from the 1960s and for eastern Germany from the 1930s, which led to unequal valuations. The reform is intended to make the calculation fairer. However, it is expected that many local authorities will continue to increase the assessment rate to compensate for increased costs.
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