State permits distinct property tax levels.

Local Governments - State permits distinct property tax levels.

Beginning in 2025, municipalities in the state will have the power to set unique property tax rates for real estate. Finance Minister Monika Heinold (Greens) revealed this news on Tuesday, stating that a legislative proposal is currently being worked on to enable the parliamentary process to commence right away. The goal is to provide municipalities with the flexibility to make their own decisions regarding property taxation rates for residential and commercial properties.

As per the proposed plan, starting in 2025, a revised approach for determining property tax will be implemented. This action is a result of the Federal Constitutional Court's ruling, as city and municipal authorities were found to be using outdated data from 1935 in East Germany and 1964 in West Germany to calculate property values. This means that an approximate 36 million properties in Germany will undergo revaluation. Schleswig-Holstein will adopt the federal model for this process.

The state government has stated previously that the overall property tax revenue should remain constant for each municipality. A transparency register is being developed by the Finance Ministry to be published in September. This register will display how each municipality must adjust their property tax rates for 2025 to maintain their current revenue levels.

The state government seeks to grant municipalities more power by allowing them to choose different property tax rates, which will help account for regional variations in property values. If a municipality elects to pursue this option, they must provide a justification for the differential taxation to ensure the legality of the procedure.

FDP financial policy member Annabell Krämer critiqued the minister's decision, claiming that Heinold had given in to the ongoing reform. "For a considerable amount of time, we have been advocating for a different model. Monika Heinold has disregarded all our cautionary statements," Krämer said.

Read also:

1. Monika Heinold, the Finance Minister of North Rhine-Westphalia, mentioned that municipalities in Schleswig-Holstein will also follow the federal model for property revaluation, starting in 2025.
2. Property tax rates for real estate in municipalities across Germany, including those in North Rhine-Westphalia and Schleswig-Holstein, will gain more flexibility due to the state governments allowing unique rates.
3. The state government in North Rhine-Westphalia is planning to launch a transparency register in September, displaying how each municipality should adjust their property tax rates to maintain their current revenue levels in 2025, following the change in property taxation rules.
4. Critics, such as FDP financial policy member Annabell Krämer, argue that Finance Minister Monika Heinold should have adopted a different model for property taxation, as they had been advocating for it for a long time.

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