Marcus Aurelius already summed it up in his ‘Meditations’ (7.38): “You shouldn’t give circumstances the power to rouse anger, for they don’t care at all.” With such stoic wisdom, one may approach property tax reform in a sober manner. Meanwhile, all property owners should deal with the reform without hesitation, as it also applies to tax-exempt property owners. Legislation has been finalised and taxpayers will be required to file a tax return between 1 July and 31 October 2022. As of 1 January 2022, approximately 36 million properties in Germany will have to be re-evaluated for this purpose. The taxpayers will have to prepare and file the same number of property tax returns. And every tax return may be a bit of a challenge. In this respect, it seems a little hesitant that obviously many taxpayers have not yet started to deal in detail with their new property tax obligations.

According to a survey conducted by KPMG in the autumn of 2021 on the property tax reform among around 300 companies with real estate assets, many taxpayers have not yet prepared sufficiently for the property tax reform. At the same time, there is a surprisingly low number of employees who, according to the survey, are supposed to deal with the topic of property tax in the companies. The biggest challenge is seen in data collection.

Federal and State Models

Five states have made use of the so-called Länderöffnungsklausel (regional opening clause) and opted for their own property tax model:

  1. Baden-Württemberg (land value model)
  2. Bavaria (area model “single property tax”)
  3. Hamburg (area–location model)
  4. Hesse (area-factor procedure)
  5. Lower Saxony (area–location model)

All other federal states have opted for the so-called “Federal Model” (Property Tax Reform Act dated 26/11/2019, (Federal Gazette 2019 I, 1794). For this purpose, the coordinated Ländererlasse (regional decrees) dated 9 November 2021 on real estate and on agricultural and forestry assets as well as a list of the forms to be used for the assessment declarations, along with instructions, have already been published.

Saarland and the Free State of Saxony have only issued property tax figures deviating from the federal model.

Property Owners’ Responsibilities

In principle, the owners of the property are obliged to submit an electronic tax return. In the case of buildings on land owned by others, the owners of the land should also be obliged to declare the buildings. Other building owners should only participate in the declaration. Hamburg has deviated from this allocation and, in deviation from the land owners, has imposed a separate declaration obligation on the building owners.

All property tax models have in common that general location data such as address and land register data must be declared. The areas of land must also be declared for all models. A differentiation must be made with regard to the building areas. Baden-Württemberg only requires a declaration of the building areas in the case of mixed use, i.e. for both residential and non-residential purposes, as well as in the case of a partial property tax exemption. In the federal model and other Land models, the building areas must always be declared in accordance with EN standards or the Residential Area Ordinance. In addition, other property-specific information such as building type and year of construction must be provided in the federal model.

Effects on the public sector

Under all property tax models, property tax returns must also be submitted with the information on property tax exemptions, irrespective of any existing tax exemption. According to reports, (presumably) only those who use their property exclusively for property tax-exempt purposes will be spared the obligation to file a tax return.

This may include, for example, public legal entities that use their property for public service or use. This also applies to the public-law corporations or non-profit institutions that use the property exclusively for non-profit or charitable purposes. Public law religious companies may also be spared the obligation to declare their use as it is exempt from property tax. In very many cases, however, the property is not used exclusively for such privileged purposes. For example, an operation of a commercial nature also directly establishes a tax liability. The same applies to the economic business operations of a non-profit institution. Cases of doubt can also arise in the case of so-called asset management. Taxpayers will thus regularly not be spared the need to declare the entire property and to precisely describe the property areas and rooms used for the tax-exempt activities. This may make it necessary to consult building and architect’s documents or, if necessary, to carry out new measurements. And then it can become “very detailed”. Anyone who has ever had to “wrestle” in a tax office audit over whether, for example, the corridor to the canteen is predominantly used for business activities or exclusively for tax-privileged activities, will have an idea of what may need to be assessed for otherwise tax-exempt corporations in individual cases.


The new real estate tax or its new assessment basis requires a not insignificant effort from property owners, but it is important to compile detailed property data and submit it electronically to the tax office in the period from July to October 2022. The tax offices and municipalities will then be called on to assess the new property tax from 1 January 2025.