The Hessian tax offices are still waiting for some property tax returns almost a year after the deadline. As of January 11th, more than 60,000 declarations were still missing across the country, as a spokeswoman for the Regional Finance Directorate (OFD) in Frankfurt told the German Press Agency. Almost 2.7 million declarations had been received by then. As early as April 2023, around 400,000 reminder letters were sent to defaulting taxpayers in Hesse.
According to the OFD spokeswoman, if the declaration obligation is not fulfilled, the tax administration will take action. Missing information would ultimately be estimated and the property tax base amount would be determined. “These estimates are inherently subject to uncertainty,” said the spokeswoman. In Hesse, according to the state’s financial administration, a total of around three million properties as well as agricultural and forestry businesses are affected by the reform.
Property tax is being reformed across Germany; new calculation bases will apply from 2025. In order to prepare for the reform, property and property owners were required to submit property tax returns containing a wide range of information. The declared goal is that the nationwide reform called for by the Federal Constitutional Court is “revenue-neutral” – i.e. does not lead to additional tax revenue.
As property values are reassessed, some property owners may have to pay more or less taxes from 2025 onwards than before. Landlords can pass on the property tax to their tenants through additional costs.
Despite some missing notifications, the changeover in Hesse is still on schedule, said the OFD spokeswoman. Accordingly, more than 2.3 million notices have already been sent by the Hessian tax offices. “The processing of the declarations is therefore running at full speed,” said the spokeswoman. The tax offices’ estimation process has also already begun.
The reform of the property tax will probably lead to adjustments in the assessment rates in the municipalities. The Hessian tax administration wants to give the municipalities a recommendation on the assessment rate in mid-2024, the spokeswoman explained. “In the end, the decision about the specific assessment rate is of course made by the respective municipality within the framework of local self-government.” The assessment rate is a factor by which the tax base amount is multiplied to determine the tax liability.
Not all federal states apply the same criteria when calculating the new property tax. While most use a federal model that has also been criticized, Hesse, Bavaria, Baden-Württemberg, Hamburg and Lower Saxony have developed their own calculation methods.
Property tax reform in Hesse
