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TAXES

Germany extends deadline for property tax declaration

Property owners in Germany will have three months longer to submit a tax declaration, state finance ministers revealed on Thursday.

Published: 13 October 2022 16:57 CEST
Housing estate in Frankfurt am Main
A housing estate in Frankfurt am Main. Photo: picture alliance/dpa | Arne Dedert

The deadline for submitting the new property tax declaration will be pushed back from October 31st to January 31st, 2023. 

The decision to extend the deadline was made by the state finance ministers and Federal Finance Minister Christian Lindner (FDP) at a meeting on Thursday. It comes after Lindner revealed that barely one in three property owners had submitted their declaration by the start of October. 

Announcing the decision, Bavaria’s Finance Minister Albert Füracker (CSU) said that the extension of the submission deadline by three months would significantly relieve the burden on citizens, the economy, and tax consultants.

Lindner also welcomed the decision, telling reporters on the sidelines of the International Monetary Fund conference in Washington: “At present, there are other concerns and tasks that we have to take care of with priority.”

The FDP politician had previously argued for an extension of the deadline.

READ ALSO: Why Germany is mulling an extension to property tax deadline

Property tax reform

The reform of the currently property tax system, which is due to come into force from 2025, is one of the largest tax reforms carried out in Germany since the end of the Second World War.

The revamp was prompted by a decision from Germany’s Constitutional Court, which found that the tax rates were calculated unfairly.

Under the current system, the value of a property is calculated using records from 1935 in East Germany and from 1964 in West Germany, meaning many houses and flats are dramatically undervalued. 

Authorities must now revalue around 36 million properties using data submitted by the owners. This includes providing details such as plot size and living space, property type, construction year and the so-called standard land value via the government’s Elster tax portal.

However, experts have warned that the declaration is far too complicated for many people to fill out by themselves.

In addition, the reform has hit numerous technical snags along the way, with the Elster portal buckling under the excess traffic just days after tax authorities started accepting the property tax return. 

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TAXES

German government clashes over Finance Minister’s tax relief plans

Finance Minister Christian Lindner has been slammed over his proposals to cut taxes in Germany, with his coalition partners saying they benefit the wealthy.

Published: 6 June 2024 10:17 CEST
German government clashes over Finance Minister's tax relief plans

Lindner, of the pro-business Free Democrats (FDP), said he wants to offset the effects of high inflation and provide taxpayers with relief totalling around €23 billion over the next three years. 

The plan is to adjust wage and income tax in three stages by 2026, Lindner said during a presentation in Berlin on Wednesday. “It is simply a matter of fairness to adjust the tax system to inflation. The state must not be the winner of inflation.”

Lindner wants to gradually increase the tax-free allowance, up to which no tax is paid by earners, to €12,336 by 2026, including a backdated increase of €180 to €11,784 this year.

The next step would come into force from January 2025 when the basic tax-free allowance would rise by a further €300 to €12,084.

READ ALSO: 8 unlikely tax breaks in Germany that international residents need to know

In his plans, Lindner argued that this would provide a saving to taxpayers of €2 million in total – and would be a signal of support to working people after unemployment benefits – or Bürgergeld – were increased due to inflation.

The FDP politician also said he wanted to combat cold progression – a phenomenon where pay increases are eaten up by inflation but taxed at a higher amount – by raising the threshold for paying the top rate of tax to €69,798 per year in 2026.

German Finance Minister Christian Lindner (FDP) at an event in Berlin on June 15th.

German Finance Minister Christian Lindner (FDP) at an event in Berlin on June 15th. Photo: picture alliance/dpa | Michael Kappeler

However, it comes as the German government is having to make tough budget choices and savings. And there is currently still a financing gap of around €25 billion in the German government’s budget plans for the coming year.

Despite the high costs of his tax relief plan, the FDP leader does not see the current budget discussions being jeopardised: “If the coalition strengthens economic growth with bold impulses”, sources close to the minister said. 

The FDP’s coalition partners – the Greens and Social Democrats (SPD) – have hit back, arguing the plans will primarily help those who are better off at a time when budgets are tight. 

“You can’t demand drastic savings from other departments…and then demand tens of billions yourself without need,” Green Party finance expert Katharina Beck told Reuters.

“In view of necessary investments in defence, it is dubious to bring tax cuts in the double-digit billion range into play,” Beck said, adding that the rich would benefit most from the reduced tax burden.

Michael Schrodi, financial policy spokesman for the SPD parliamentary group, expressed a similar view, saying that social security should take priority — rather than providing tax relief for top earners. 

In the last months, more cracks have been showing in the coalition government, which is led by the SPD, as junior partner – the Free Democrats – has been pushing for changes to spending and cuts to social security.  

READ ALSO: Why a push for tougher benefit sanctions in Germany is sparking a dispute

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