A proposal by Germany’s Left Party (Die Linke) to introduce a special tax on luxury real estate is facing criticism from municipal and state governments.
The plan, which suggests a higher rate of real estate transfer tax for properties valued at over four million euros, has been labelled “populist” by Hamburg’s Finance Senator Andreas Dressel (SPD). In remarks to Redaktionsnetzwerk Deutschland, Dressel argued the proposal misunderstands the nature of the real estate transfer tax as a value-based transaction tax and raises constitutional concerns. He also cautioned that the proposed four million euro threshold could lead to problematic and arbitrary tax increases and potentially contribute to higher rental costs.
André Berghegger, Chief Executive of the German Association of Cities and Municipalities, acknowledged the idea of increasing taxes on luxury villas presents complex challenges. He pointed to the ongoing implementation of a long-debated property tax reform, designed to ensure that more valuable properties bear a higher tax burden. Berghegger warned against potential legal uncertainties, noting that establishing different tax rates for very expensive properties could conflict with existing rulings from the Federal Constitutional Court. He suggested closer examination of the court’s underlying judgment would be necessary to assess the proposal’s legal viability.
