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International Handbook of Land and Property Taxation

Edited by Richard M. Bird and Enid Slack

This comprehensive Handbook explores case studies of land and property taxation in 25 countries (five in each of five regions – OECD, central and eastern Europe, Asia, Africa, and Latin America), and focuses on the potential contributions of the property tax to the revenues of urban and rural governments and to more efficient land use.
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Chapter 7: Land Taxation in Germany

Paul Bernd Spahn


Paul Bernd Spahn Germany is a federal country consisting of 16 autonomous states (Länder) of which three are city-states (Berlin, Hamburg and Breme) that exercise both state and municipal functions and a strong municipal sector represented by roughly 14 000 municipal governments. The municipal sector consists of county-free cities (kreisfreie Städte), counties (municipalities of mainly rural areas forming so-called Kreise) and the municipalities themselves (Gemeinden). The three levels of government are mainly financed by shared taxes. In addition, there are some federal excise taxes and minor state taxes. These taxes are subject to federal legislation and are uniform in structure and tax rates. The municipal sector also participates in shared taxes (VAT and personal income tax). There is also an important local business tax and less important land taxes where local governments have the right to vary their municipal ‘leverage factors’ (see below) and thus enjoy some limited taxing autonomy. The basic framework of the German land tax The legal basis of the German land tax is the federal land tax law (Grundsteuergesetz) of 7 August 1973 and subsequent modifications. The tax code is uniform across the Federation although the tax is a municipal tax.1 Municipalities are however entitled to ‘leverage’ the land tax (see below for explanation), they collect the tax, and they appropriate its full proceeds. The administration of the tax is split between the state (for assessing the rateable value of the property and determining the appropriate ‘base rates’ according to federal legislation) and...

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