Germany property tax reform impacts tenants and faces legal challenges

Germany's property tax reform is set to impact tenants in 2026, as the new assessment rules and adjusted municipal collection rates from 2025 will first appear in operating cost statements during that year. While the Federal Ministry of Finance suggests the reform should not significantly increase total property tax revenue, individual properties may see substantial shifts in tax burdens, leading to higher payments for some. Under current regulations, landlords can pass these costs to tenants if stipulated in the rental agreement.

In a related legal development, the Administrative Court in Düsseldorf ruled against the city of Krefeld regarding its property tax assessment. The court overturned a tax notice for a non-residential property, finding that the city's use of highly differentiated tax assessment rates—506% for residential properties versus 995% for non-residential properties—violated the principle of equality under the German Basic Law. The court noted that the city failed to properly account for mixed-use properties that serve residential purposes, resulting in an unjustifiable disparity in treatment.