- In the above video: Brief and concise explanation of property tax reform
The Federal Finance Court will soon address the reformed property tax. The competent tax office has filed a complaint against the decision of the Rheinland-Pfalz Finance Court. This was confirmed by Stephan Weinberg, State Secretary in the Ministry of Finance of Rheinland-Pfalz, to FOCUS online. The complaint concerns, among other things, the recourse to land values for property tax assessment.
The Rheinland-Pfalz Finance Court had previously dismissed two urgent applications against the federal model of the reformed property tax. The flat-rate land values were deemed too high, with no possibility of objection. The state now intends to challenge this decision with its complaint to the Federal Finance Court. This is expected to bring clarity on the property tax reform nationwide. “The state of Rheinland-Pfalz is convinced of the constitutionality of the federal model,” said Weinberg.
Decision of the Federal Finance Court will proceed to Karlsruhe
In doing so, the state intends to rely on a decision of the Finance Court of Saxony. Here too, the reformed property tax, which was largely drafted by the then Finance Minister Olaf Scholz (SPD), applies. The Saxon judges ruled that the assessment basis of the land values is lawful. The judgment is not yet final.
The Federal Finance Court is the highest tax court in Germany. A decision by the Munich judges will be taken into account as a statement in a possible decision by the Federal Constitutional Court.
Judges expressed “serious doubts” about the constitutionality of the property tax
Prior to this, the judges of the Rheinland-Pfalz Finance Court expressed “serious doubts” in their decision about the legality of the notices that were sent. They also doubted the “constitutionality of the underlying valuation rules.” With the decision, the enforcement of the property tax notices was initially suspended. There has been no ruling in this case yet.
In the two cases heard, the judges criticized the determined property tax value by the tax office as being set much too high. In the first case, it concerned a 1880 built, unrenovated single-family house with a living area of 72 square meters. Here, the tax office had set the property tax value at a flat rate of 91,600 euros.
The second case concerned a single-family house with a living area of 178 square meters, built and ready for occupancy in 1977. Despite being in a sloping location and accessible only via a private road, the tax office set the property tax value at 318,800 euros.
Rheinland-Pfalz is relying on the so-called federal model for property tax. As the valuation standards currently apply in eleven federal states, the judges allowed the state to file a complaint against the decision with the Federal Finance Court. This is intended to ensure a uniform legal practice nationwide. Baden-Württemberg also uses a similar valuation model.
“Property tax is on very shaky ground”
The property owners’ association Haus & Grund, as well as the Association of Taxpayers, see the court’s decision as groundbreaking. In their view, the reformed property tax is unconstitutional. “The land values are a major reason why the new property tax is on very shaky ground,”declares the president of Haus & Grund, Kai Warnecke.
“There is no counter-expertise or rebuttal possible by the owners,” explains Daniela Karbe-Geßler from the Bund der Steuerzahler. “This is possible in other proceedings where the land values play a role. But the legislature consciously did not include this in the case of the property tax.” With several model lawsuits in Rhineland-Palatinate, Berlin, and North Rhine-Westphalia, the associations intend to go to the Federal Constitutional Court in Karlsruhe.
The appeal of the state of Rhineland-Palatinate will now elicit a position from the Federal Fiscal Court on this issue. However, it still remains unclear how the judges in Karlsruhe would ultimately rule in a potential case.
What does this mean for the property tax notices?
Even in the event of an appeal to the Federal Fiscal Court, already issued property tax notices will remain valid. “Owners should definitely keep their property tax notices open and lodge a complaint,” says Karbe-Geßler from the Bund der Steuerzahler. The deadline is one month after the notification of the decision. “But we assume that a future judgment from Karlsruhe will apply to all property tax notices, even if the deadline has already expired.”
