SOLUTIONS

German taxation of property


Overview

Property owners in Germany are required to pay annual property tax as well as the one-time payment of land transfer tax.

Overview
  • Property tax
  • Property tax rate
  • Property transfer tax

Property tax

The tax rate of the property tax depends on the type of use of the property. A distinction is made between two categories: • Property tax "A": land for agricultural and forestry use • Property tax "B": other developed and constructible land

Property tax rate

The property tax rate is calculated by multiplying:

The determined unit value of the land

The so-called "unit value" of a property is determined by the competent tax office. It is based on valuations of land from 1964 (1935 for the former East German states) and for this reason, it is therefore generally much lower than the current value of a property.

The property tax index

The property tax rate varies between 0.26% and 1% depending on the type of use of the property and the state in which the property is located.

The municipal assessment rate

In comparison with the municipal assessment rate in the case of the commercial tax rate, the municipal assessment rate in the field of property tax is also individually determined by each municipality. In this case, the municipalities set a separate rate for Property tax "A" and for Property tax "B" whereby the tax rate of Property tax "B" is generally somewhat higher.

Example calculation

Example of calculation of the property tax rate for a commercial building in a municipality in a state in West Germany with an average assessment rate of 441% for Property tax "B":

determined Unit Value EUR 1,000,000 (Example) x Property tax index x 0.35% x Local assessment rate "B" x 441% = Property tax rate = EUR 15,435 (~ 1.54% of the determined unit value)

Real estate transfer tax

If real estate is acquired in Germany or otherwise transferred, a one-time property transfer tax must be paid (usually by the purchaser of the property). Depending on the state, the property tax rate is 3.5% -6.5% of the agreed purchase price.*

* Payable even in case of foreclosures, exchange etc. only if the purchase price exceeds EUR 2,500

Property transfer tax rates in the respective Federal States in 2015 3.5% Bavaria, Saxony 4.5% Hamburg 5.0% Baden-Württemberg, Bremen, Mecklenburg-Western Pomerania, Lower Saxony, Rhineland-Palatinate, Saxony-Anhalt, Thuringia 6.0% Berlin, Hesse 6.5% Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein The property tax must also be paid if the shares in a partnership with real estate property are transferred to 95% within five years.

Please note

For tax & legal advisory please refere to our cooperation partner Counselhouse.

Please find an overview about German taxes as follows

German customs duties and import regulations
Read More
German tax return
Read More
German taxation of property
Read More
German VAT
Read More
German company taxation
Read More

Let us be a part of your success story

Andreas Wilke

Owner

+49 6181 250 330

 

Email me  Book a meeting

Why us?
  • Strong experience in supporting foreign companies to develop their business in Germany
  • Our clients success is our success. Our objective is to grow along our clients
  • We are family owned. Our long- term perspective allows for good strategy and decision-making

Related business cases

Related business solutions

Strategy
Read More
E-commerce
Read More
Market expansion
Read More
Business incorporation
Read More
Growth
Read More
Turnaround
Read More

To learn more about how we can add value to your business in Germany, please do not hesitate to contact us today!

Contact us Book a meeting https://wa.me/4917671750811

Or call us at +49 (0) 6181 25 03 30

Book your advisory call today

We help you to assess the current phase of your business and to build your personal roadmap about how your business can start and grow in Germany.

Book a meeting

Market Entry Newsletter

Our newsletter covers the news you need. Subscribe now.

Share