German municipalities are anticipating potential increases in property tax rates in the coming years as they navigate growing budgetary constraints, according to the German Association of Cities and Municipalities.
Christian Schuchardt, the association’s Chief Executive, indicated that worsening local finances could compel many cities to raise property tax revenues, independent of the recent tax reforms. “Cities must continue to be able to operate schools and daycare centers, bear social burdens and maintain parks – without even mentioning investments” he stated.
Despite these concerns, Schuchardt anticipates that the new tax regulations, which came into effect on January 1, 2025, will ultimately result in a revenue-neutral outcome for property tax both nationally and at the state level. Data released on Thursday by the Federal Statistical Office for 2024 appears to support this expectation, revealing that municipalities collected a total of €15.6 billion in property taxes-a 3.8 percent increase.
Schuchardt highlighted that cities haven’t significantly increased their property tax rates preemptively in anticipation of the reforms, dismissing earlier concerns to the contrary. The overall financial picture suggests a stabilization of property tax revenue despite evolving economic conditions and local budgetary pressures.