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Provisions on standard rateable values for assessing property tax are unconstitutional

Federal Constitutional Court, Press Release No. 21/2018 of 10 April 2018

Judgment of 10 April 2018

The provisions of the Valuation Act (Bewertungsgesetz – BewG) regarding the standard rateable valuation (Einheitsbewertung) of property in the former West German Laender are incompatible with the general guarantee of the right to equality, at least since the beginning of 2002. With regard to the valuation of property, the legislature continues to draw on the general assessment date (Hauptfeststellungszeitpunkt) of 1964. This results in serious and extensive unequal treatment, which is not sufficiently justified. Based on these reasons, the First Senate of the Federal Constitutional Court has declared the provisions unconstitutional in its judgment pronounced today, ordering that the legislature must enact new provisions by 31 December 2019. Until that date, the unconstitutional provisions may continue to be applied. After the new provisions have been promulgated, the old provisions may be applied for another five years from the date of promulgation, but not after 31 December 2024.

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Real Estate Tax Compliance – Current Focal Points from Recent Tax Audits

The management of single real estate properties through to extensive real estate portfolios is certainly a challenging task, and one which becomes more complex when taxation guidelines are to be taken into consideration. In addition to other factors, the recent administrative decree of the German Federal Ministry of Finance (BMF) concerning the differentiation between mere amendments of incorrect tax returns and a voluntary self-disclosure to the tax authorities of false or incomplete tax declarations in case of tax fraud, has seen tax compliance once again become the focus of all participants. Tax practice has shown that pitfalls are to be found in several places, and that the best tax-structure memo cannot provide any guarantee for a life without tax worries if circumstances change later or new circumstances arise, or the original legal or tax guidelines are not carried out properly.

The following report in the Financial Year Book 2018 aims to highlight key focal points from tax audits with which we have been entrusted, and therefore offer proposals for possible solutions at the same time; in this respect, we assume an inbound scenario in which real estate located in Germany is held by domestic or foreign property companies.

Complete report für download (PDF/176KB)

Parker Randall/ Real Estate Tax Compliance in Germany

Unsere News geben Veröffentlichungen jeglicher Art nur auszugsweise wieder. Für Informationsfehler können wir daher trotz Sorgfalt keine Haftung übernehmen. Individuelle Beratung im Einzelfall kann dies nicht ersetzen. Auf Inhalte von Internetseiten, die wir verlinkt haben oder auf die wir hinweisen, haben wir keinen Einfluss. Eine Haftung hierfür wird daher ausgeschlossen.

Holding real estate in Germany

Fund Structures and German Taxation at a Glance

Although decisions on investments in real-estate are not primarily tax driven, taxation plays an important roll. Not only the recent BEPS discussion but also further aspects of transfer-pricing, interest deduction and loss utilization play an increasing role in international tax structures.
Last but not least another important intention when administrating real estate is to hold the Propco free of German trade tax which can occur under specific circumstances.

The purpose of this document is to provide an overview – at a glance – of major tax aspects which are relevant for international investors planning to invest in German real estate.

LM as an independent accounting, auditing, tax compliance and law firm has a strong focus in real estate for many years thus enabling us to cover the full life-cycle of an asset. Due to our comprehensive relation-ships to various service providers in the field of real estate such as law firms, property managers and last but not least accounting & domiciliation providers domiciled in other jurisdictions such as Guernsey or Luxembourg we are in the position to serve as a one-stop-shop to drive your real estate project to success.
We will treat your real estate as if it was our own!

Should you seek for further assistance please do not hesitate to contact us.

Schlagwörter: Real-Estate/ Internationales Steuerrecht

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Unsere News geben Veröffentlichungen jeglicher Art nur auszugsweise wieder. Für Informationsfehler können wir daher trotz Sorgfalt keine Haftung übernehmen. Individuelle Beratung im Einzelfall kann dies nicht ersetzen. Auf Inhalte von Internetseiten, die wir verlinkt haben oder auf die wir hinweisen, haben wir keinen Einfluss. Eine Haftung hierfür wird daher ausgeschlossen.