Property tax Hammer judgment from the tax court!
The decision of the Rhineland-Palatinate Fiscal Court, which ruled on November 23, 2023 in two proceedings for interim relief (case numbers 4 V 1295/23 and 4 V 1429/23) on the constitutionality of the new property tax and valuation law, is of great importance. In both of these cases, the court suspended the enforcement of the challenged property tax assessment notices. But what exactly does this mean?
Case 1: Excessive rental value and standard land value
The first case concerned a detached house with a living space of 72 square meters, which was built in 1880 and had not been renovated for decades. The owner argued that the statutory rental value per square meter was excessive due to the poor condition of the house. The standard land value for the property was 125 euros per square meter. The tax office ignored these arguments and set the property tax value at 91,600 euros.
Case 2: Standard land value without discount
The second case involved a detached house with a living space of 178 square meters, which was ready for occupancy in 1977. The standard land value for the property was 300 euros per square meter. The owners argued that a discount of 30% on the standard land value was appropriate due to special circumstances, such as the second row of buildings, the difficult site development and a hillside location. However, the tax office did not take this discount into account and set the property tax value at EUR 318,800.
The court casts doubt on constitutionality
In both cases, the Rhineland-Palatinate tax court suspended the enforcement of the property tax assessment notices because there were serious doubts about the legality of these notices and the underlying valuation rules. This decision is of great importance as it encourages taxpayers to take action against the valuation according to the new property tax model.
The doubts about constitutionality concern various aspects. Firstly, the court doubts that the standard land values were determined correctly. Furthermore, there are concerns regarding the independence of the expert committees responsible for determining these values. It is feared that opportunities to exert influence are not sufficiently excluded. In addition, gaps in the assessors’ data could lead to considerable distortions in the determination of the standard land values.
Lack of individuality and value distortions
Another problem is the lack of individuality in the valuation of properties under the new model. Typified values are used without taking sufficient account of individual circumstances. This would lead to distortions in the valuation, with some properties being drastically overvalued and others drastically undervalued. The court sees this as a violation of the principle of equality in accordance with Art. 3 Para. 1 of the German Basic Law.
Conclusion
Although the decisions of the tax court initially only concern these two individual cases, they have far-reaching consequences. The suspension of the enforcement of the property tax assessment notices means that future assessments will also be suspended by law. However, this is not a final decision on the constitutionality of the valuation rules.
The court has allowed the appeal to the Federal Fiscal Court as the legal issues are of fundamental importance.
We will keep you up to date on the further procedure.
What you can do
If you have not yet lodged an objection to your property tax assessment notice, you can do so with our sample objection. You can find it here: Sample objection 2023
If the tax office has rejected your objection and sent you an objection decision, then fight back with the 2023 property tax model case.
If you missed your objection deadline, submit your special application now. You can find it here: Contest property tax tax office, even though the deadline for the objection has expired – and send it with Elster or tax software
