Your challenge – the property tax reform
On December 2, 2019, the Property Tax Reform Act was announced in the Federal Law Gazette I. This was just in time, as the Federal Constitutional Court had previously ruled that the unit value determination is unconstitutional as a basis for property tax assessments.
What does the new property tax – property tax 2.0 – entail in practice and for practice?
When will the new law be applicable?
(For the first time) as of January 1, 2022: The revaluation of the relevant real properties is required as of this date.
For whom or what are the reformed laws relevant?
The laws apply to all owners of domestic real property and agricultural and forestry properties.
What exactly should be done after January 1st, 2022?
The revaluation of the relevant real property is required as of this reference date. Expect the tax office to ask you to file a property tax return "promptly" in 2022.
How is the new property tax being calculated?
There is no general answer to this question. In principle, the so-called federal model (Bundesmodell) applies including the standard earnings value method (typisiertes Ertragswertverfahren) - for example, for residential rental properties and condominiums - and the standard substance value method (typisiertes Sachwertverfahren), for example, for commercial properties and part-ownership. However, due to the escape clause granted by the legislator, property tax is calculated not only according to federal law, but also according to different state law.
What is the meaning of the "escape clause"?
Each federal state has the right to introduce its own property tax law. Consequently, the location of the property determines which property tax law is to be used for the revaluation. Some federal states have already taken advantage of this, and others are about to do so. Due to the variety of valuation models, companies with real properties located throughout Germany must prepare different real estate-specific data depending on the federal state and incorporate this data into the revaluation and the corresponding federal state-specific declaration forms - this is a high administrative burden that you can easily master with the help of the PwC Property Tax App.
Aren't the few pieces of data required for the property tax return retrievable from public and statutory sources?
No, on the one hand unfortunately tax returns still won’t fit on a beer coaster. On the other hand the declaration requires not only legally defined data such as standard production costs, discounted interest factors or value ratios, but also further information including the gross floor area, land area as well as the construction years of the buildings. The owner is responsible for providing this information.
After the legal reform, should every company hire a property tax expert now?
No. In particular for companies without their own (property) tax department and owners with a manageable property portfolio, it makes sense to hand over the compliance process to a reliable sparring partner. Also in regard to the 2nd declaration round in 2029 (from 2022 a property tax declaration has to be filed every 7 years) or to the notifications required throughout the year.
Your digital solution for the new property tax
- How does the data collection / data entry work?
- What can an efficient declaration process look like?
- How can a large number of assessment notices be reviewed automatically?
Our technological platform, the PwC Property Tax App, provides you with answers. It is your technological sparring partner for mapping the entire property tax compliance process: from data collection and revaluation to declaration and assessment review. Developed with companies and for companies with the clear goal of providing all property owners with the best possible digital support on the path to an efficient property tax declaration.
The PwC Property Tax App starts with the management of the data, ensures an easy migration from existing data management-systems and supports the digitization of the data. All of this with PwC's ongoing professional and technological seal of quality.
What are the features of the PwC Property Tax App?
The PwC Property Tax App is a modular and cloud-based tool that maps the entire property tax compliance process.
Module 1: Base – Data management and revaluation
Using a csv file, you import your (already) digitized data into the data management module with one click. The data was not complete? You can easily make subsequent manual additions in the tool. The integrated document management system is also available for storing and filing the "back-up material" (e.g. tax-relevant documents or technical documents.
Once all the necessary property-specific data has been recorded, the publicly available and legally determined data is automatically complemented and the revaluation of the properties can be initiated - "without the push of a button", according to the applicable federal or state model and based on the current law. You can see the tax-relevant parameters "property tax value", "property tax assessment amount" and "property tax amount" at a glance.
In addition, widgets in the integrated dashboard visualize current tasks, the status of declaration obligations, assessments, appeals, and more.
Module 2: Reporting – Declaration
Based on the data stored for the revaluation, the declaration forms are filled in automatically. The data is transmitted to the responsible tax authority via the ELSTER interface (ERiC) or, if required, via ELSTEROnline. Do you have a 4-eyes principle in-house or do you have to observe other individual steps before data transmission? No problem. In such a case the integrated release process provides support, which can be adapted to your specific requirements without much effort.
Module 3: Assessment – Review of assessments
Does the assessment correspond to the submitted declaration? Our assessment module answers this question as soon as the assessment notices - presumably still issued in paper form for the time being - are stored (as a scan) in the Property Tax App. Thanks to the automatic comparison of the assessment data with the declaration data and the integrated dashboard with upcoming deadlines, you have all the information you need for an efficient and transparent assessment review and appeal process at your hand.
Have a look at our tool
Why you should start dealing with property tax now
First collection of property tax is set to occur in 2025, but calculation of property tax values is required as of Jan. 1, 2022.
"Variety of models": The opening clause for federal states allows for different evaluation models
Using free capacities on an ongoing basis – without hiring additional skilled workers
- Mapping of the complete compliance process for your company
- Unlimited number of users and no multi-year minimum subscription period
- Other customized packages available, feel free to contact us
- Focus on your core business:
Minimum tying up of your resources to the compliance process.
- Efficiency within the scope of a tax audit:
Minimisation of queries, tax back payments and consultancy fees in the context of a tax audit by involving experts.
- Audit-proof documentation:
Backup and storage of relevant documents
With the PwC Property Tax App you keep track of the property tax reform
How can you manage this additional workload in a timely manner? With the help of a qualified team that takes the compliance work completely off your shoulders. Or provides selective support.
Or through your in-house experts, who are significantly supported by a smart IT solution.
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