The Federal Finance Court (BFH) issued a landmark ruling this Wednesday, determining that the state ground tax law in Baden-Württemberg is not unconstitutional. In two associated cases, the court dismissed the appeals, finding them to be unfounded. In both instances, the plaintiffs had alleged violations concerning both simple statutory law and the Basic Law (German Constitution).
The first case concerned a property in Karlsruhe. The owner argued for a lower ground tax valuation, based on the requirement to differentiate between various sections of the property’s usage. However, the tax office had utilized the entire land value for its calculation. The BFH upheld the tax office’s procedure, concluding that neither federal nor state law had been violated.
Similarly, in the second case, a couple from Stuttgart challenged the tax valuation, arguing for a reduction due to traffic noise and other unique characteristics of their plot. Again, the BFH confirmed the financial office’s calculation and found no constitutional infringement. The court stated that lawmakers have the authority to implement typical and blanket regulations when collecting ground taxes, specifically to simplify administrative processes.
These new ground tax rules have been in effect since last year. The BFH had previously determined, back in November, that the federal model used in eleven states could remain intact. Following this ruling concerning Baden-Württemberg, the BFH still has pending cases regarding the state-specific ground tax models for Hamburg, Hesse, and Bavaria. The court tentatively plans oral hearings for the Hamburg and Hesse models in November 2026, with the Bavarian model scheduled for the first half of 2027.