German municipalities are bracing for potential increases in property tax rates as they navigate increasingly strained municipal finances, according to the German Association of Cities and Municipalities.
Christian Schuchardt, the organization’s Chief Executive, indicated that many cities may be compelled to raise local property tax levies in the coming years to address budgetary shortfalls. He emphasized the continued need to fund essential public services like schools, childcare facilities, social welfare programs and public spaces, even without considering potential new investments.
Despite these financial pressures, Schuchardt anticipates that the recently implemented property tax reforms, effective January 1, 2025, will likely result in revenue neutrality at both the national and regional levels. Preliminary data released by the Federal Statistical Office for 2024 suggests this may be the case, with municipalities collectively generating €15.6 billion in property tax – a 3.8 percent increase.
Schuchardt noted that, contrary to some predictions, municipalities did not broadly preemptively increase property tax rates in anticipation of the reforms, suggesting a willingness to adapt to the new system before resorting to rate increases.
