date | theme

03. January 2022 | Property tax reform 2022: what is new?

03. February 2022 | The new property tax in Bavaria from 2025 (this contribution)

04. February 2022 | Property tax in Baden-Württemberg from 2025

07. February 2022 | Property tax in Saarland from 2025

08. February 2022 | Property tax in Saxony from 2025

10. February 2022 | Property tax in Hessen from 2025

11. February 2022 | Property tax in the Hanseatic City of Hamburg from 2025

14. February 2022 | Property tax in Lower Saxony from 2025

The current property tax reform has led to Bavaria, among other things, adopting its own law for the future collection of property tax. Its first application is scheduled for 2025. Land is the basis for calculating property tax B. For this purpose, a reduced taxation applies to large land areas. In addition, a different calculation of the property tax in Bavaria takes place on built buildings. For this purpose, the property tax on monuments, social housing and residential buildings in close geographical connection with agricultural and forestry enterprises should be reduced to 25 %. In addition, municipalities have the possibility to reduce the lifting rate separately in relation to the property tax of the aforementioned buildings. But also in general residential real estate in Bavaria receive a more favorable approach of 70% in the calculation of the property tax. Moreover, the taxation of agricultural and forestry enterprises via property tax A takes place on the basis of the general taxation rules under the Bavarian Property Tax Act.

As most who seem to be interested in this article already know, the Constitutional Court found some time ago that the property tax is unconstitutional. So the legislature was obliged to reform the property tax. However, since the real estate tax belongs to the cities and municipalities, the federal states also had a proper say in the drafting of the real estate tax reform. But because the Federal Government’s proposal pointed in a direction that was not a good alternative to the previous model, at least from the point of view of the Bavarian state government, it demanded that the federal law should contain an opening clause for the federal states, so that Bavaria approves the new property tax law in the Federal Council.

For this reason, several federal states have now decided to make use of the opening clause. As the main initiator of the introduction of an opening clause, it is therefore logical that Bavaria now introduces its own law on property tax. We would like to report on this in this contribution.

In fact, Bavaria hastened to reform the property tax with its own law. The Bavarian Property Tax Act (BayGrStG) entered into force on 10.12.2021. However, the taxation of real estate in Bavaria, as in all other countries, applies for the first time in 2025. This is provided for in Article 7 of the BayGrStG. But as early as 2022, property owners must take the first measures. Article 11 of the BayGrStG stipulates that the new law will enter into force on 01.01.2022. In addition, the first application of the Bavarian Property Tax Act also emerges from Article 6 of the BayGrStG – albeit indirectly. This is because paragraph 1 contains the requirement allowing a deviation from the provisions of the main assessment procedure according to § 221 BewG. Therefore, there should be no recurrent main assessment procedure in Bavaria.

In this context, the main statement is also important. According to Article 6 (1) sentence 1 BayGrStG, it is to take place on 01.01.2022. However, the request to submit a property tax declaration in this regard is still being made by the Bavarian State Office for Taxes. This shall take place in the framework of a general decision by public notice. The Bavarian Property Tax Act refers to § 228 (1) sentence 3 BewG.

Article 6 BayGrStG also contains other instructions that prevent the application of other legal norms. This includes that no determination of the type of property, as required by § 219 BewG, should be made. In addition, Article 6(5) of the BayGrStG stipulates that the competent tax office should be informed about changes affecting the tax bases, by way of derogation from § 228(2) of the BayGrStG until 31. 1 March of the calendar year following the change date. This gives Bavaria two months more time for such a report. In addition, Article 6(1) of the BayGrStG contains instructions which, when determining the tax bases, do not take into account § 163 AO on different taxation on equity grounds.

Of particular importance, however, is the reference to the general property tax law. The application of the General Property Tax Act with regard to the reduction of the property tax figure according to § 15(4) GrStG in Article 4 BayGrStG or the exceptions to the fixing of the lifting rate in Article 5 BayGrStG are cited. Further instructions regarding the application of the Federal German Property Tax Act in Bavaria are provided in Article 10 BayGrStG.

Another important point is that even under the new law in Bavaria, both normal, i.e. built-up and unbuilt real estate (real estate tax A) and agricultural and forestry enterprises (real estate tax B) are still subject to taxation by real estate tax. The legal standards for the latter tax entities are contained in Part 2 of the BayGrStG, which begins with Article 9 of the BayGrStG. Part 1 of this Act, on the other hand, comprises Articles 1 to 8 of the BayGrStG and determines the taxation of land by property tax B in Bavaria.

In addition, the Bavarian Property Tax Act specifies when a property is considered to be built. Article 2 of the BayGrStG determines this. There, the first paragraph refers to the definition of living space in the Living Space Ordinance.

The law makes its own provisions in Article 2 BayGrStG with regard to the consideration of garages and other ancillary buildings when they are connected to residential units. Garages with a floor space of up to 50 m2 may be disregarded. For ancillary buildings, however, a maximum usable area of 30 m2 is provided in order to also benefit from such an exception.

Finally, the Bavarian Property Tax Act defines when a property is considered unbuilt. In general, the requirement that a construction of 30 m2 is to be regarded as insignificant applies.

As we will see in a moment, the distinction between undeveloped and built-up land is particularly relevant for the calculation of property tax in Bavaria.

In Bavaria, the property tax on real estate is determined using the land area approach. This is done in two ways. On the one hand, the respective competent tax office determines a property tax measurement amount from the information it receives from the taxable property owners via property tax return. To do this, you have to make a sum of two amounts. One is related to the land area, while the second is related to any buildings built on it. This is done by multiplying the property tax figure, as shown in Article 4 of the BayGrStG, by the so-called equivalence amount. The equivalence amount represents an amount of money per plot of land.

As a general rule, Article 3(1) of the BayGrStG provides for an equivalent figure of EUR 0,04 per square metre of land for the calculation of the equivalent amount. However, there are also three exceptions.

3.1.1. Calculation of the equivalence amount for land with residential immovable property

If there are buildings on the property in which at least 90 % of the land is used as living space, a distinction is made between a share of the land area that is not more than 10 times the living space and the share of the land area that exceeds this amount. For the exceeding portion, the number of equivalences is included only halfway into the calculation.

So if a plot is 1,200 m2 and the living space of the house on it occupies only 100 m2, then in this example the greater part is 200 m2. This proportion is then multiplied by the reduced equivalence number of 0.02, the rest of the area (1,000 m2), but regularly by 0.04.

3.1.2. Calculation of the amount of equivalence for only minimally built or fortified land

The law provides for a further exception if a plot of land is built or fortified on a maximum of 10% of its area. Here, the regular approach of the equivalence number applies at most to 10,000 m2. Each additional square metre of land results in a calculation using the following formula:

Amount of equivalence = (exceeding land area x number of equivalences)0,7

This also leads to a reduction in property tax, in which large, undeveloped land receives a tax relief.

3.1.3. Calculation of the amount of equivalence in the case of plots of land with only limited residential development

But the Bavarian Property Tax Act should also take into account cases in which both previously mentioned conditions exist. In such cases, one proceeds by first multiplying the land area, which corresponds to a maximum of ten times the living area, by the regular equivalent number. As long as the additional land area is a maximum of 10,000 m2, the equivalent number according to the half approach (see above) should be a maximum of 0.02. And if the property should be so large that it exceeds the said limit of 10,000 m2, then the calculation of the previously mentioned variant follows with the formula: equivalence amount = (exceeding land area x equivalence number)0.7.

As complex as the previous calculation rules for property tax on land in Bavaria may be, the calculation of the equivalence amount in relation to building areas is quite simple. This is because an equivalent number of 0.5 is used uniformly.

If the equivalence amount has been calculated according to the above pattern, the determination of the property tax measurement amount continues. In this case, the tax office determines the property tax measurement amount by adding the equivalence amounts to the land and the building area, which must be multiplied by the property tax measurement number specified for this purpose before the addition. As a simple formula:

property tax measured amount = (equivalence amount of land and land x property tax measured amount) + (equivalence amount of buildings x property tax measured amount of buildings)

For this purpose, the basic control measurement number should generally be 100%. However, there are exceptions here too. This is because the basic control number, which is multiplied by the equivalence amount of the building (second term), can depend on the type of building.

3.3.1. Calculation of the property tax measurement amount for general residential immovable property

For residential properties, the Bavarian Property Tax Act provides for protection. However, the reduction only applies when multiplied by the equivalent amount resulting from the calculation of the living space. The basic control measurement number should be only 70%. Land thus accounts for the general share of property tax in Bavaria.

3.3.2. Calculation of the measured amount of real estate tax for agricultural and forestry residential buildings

Residential buildings, which are in a close spatial connection to agricultural and forestry enterprises, are to cause a lower property tax in Bavaria according to the will of the state government. Therefore, the Bavarian Property Tax Act stipulates in Article 4(2) of the BayGrStG that the property tax figure should be only 25 % in terms of multiplication by the equivalence amount to the building.

3.3.3. Calculation of the property tax measurement amount for architectural monuments

Furthermore, the Bavarian Property Tax Act also favours architectural monuments. For a monument in Bavaria, the property tax metric in relation to the building area is also only 25%.

The calculation of the property tax A in respect of agricultural and forestry enterprises follows, except for the advantages already mentioned, according to the general rules. But at least in one point there is a special feature. If a company (including a GbR) runs an agricultural or forestry business, then all the properties of the participating shareholders also belong to this real estate taxable business if they serve it economically.

If you are affected by the new property tax in Bavaria, you should know that in the period 01.07.2022 to 31.12.2022 the Bavarian Surveying Administration will publish certain data of all cadastral parcels free of charge on the Internet at the time of the main determination. This includes information on the cadastral parcel number, the associated municipality name and the marking name and marking number, the area of the cadastral parcel according to official information, the type of use and any area division thereto. So anyone who needs data about this for their own property to submit the property tax declaration will find it there.

But you can also make it much easier for yourself and entrust us with the matter. As you can see from the detailed description of the new legal situation on property tax in Bavaria, we have prepared well for this. Therefore, we gladly take over the submission of the property tax declaration for you. So it is best to follow us immediately on our information page by clicking on this link. We are ready for you.