Real Estate Taxation
Real Estate Transfer Tax
Real estate transfer tax ("Grunderwerbsteuer") is - with some exeptions - imposed on an inter vivos transfer of title to real estate property situated in Germany.
Transferor and transferee, whether or not resident, are jointly and severally liable; usually the contract would specify the party which will pay the tax. Taxable transfers include the acquisition of ownership through a direct purchase of real estate, as well as the acquisition of shares in a company owning real estate if the acquiring individual or group of companies owns all or substantially all (at least 95%) of the shares.
The tax is normally assessed on the basis of the consideration given.
If no consideration is given, tax is based on the value of the real estate as established under the German Valuation Act (Bewertungsgesetz). With effect from January 1, 1997, the tax rate is 3.5%.
Real Estate Tax
Real estate tax ("Grundsteuer") is an annual tax levied by German municipalities on real property. Tax will be collected in quarterly instalments starting after property take over in the registry.
It is payable by the owner of the property irrespective of residence.
The tax is at the moment levied on the assessed value ("Einheitswert") of the property using the basic federal tax rate of 0.35%. On the resulting base amount ("Steuermessbetrag"), the municipalities apply their respective multipliers to arrive at the final tax due.
The multipliers vary by municipality and may be different for industrial or agricultural property. Typical multipliers for industrial property range from 150% to 600%. Munich, Frankfurt/Main, Hamburg, Stuttgart are top ranking. Berlin is actually on the move to become the top ranking location for tax and investments in Europe.
