Record High Property Tax Revenues - Hessen Leads the Surge

Wiesbaden - Municipalities across Germany have experienced a substantial increase in property tax revenues over recent years. According to data from the Federal Statistical Office, the overall income from property taxes rose by approximately 25% between 2013 and 2023, amounting to a total of EUR15.5 billion collected in 2023 alone. This surge marks a significant financial boost for local governments, which rely heavily on these funds.

The property tax is considered one of the vital sources of revenue for municipalities. In the first half of 2024, local governments generated EUR8.0 billion from this tax, representing a 2.9% increase compared to the same period the previous year. This amount constituted 13% of total municipal taxes, while income from trade tax contributed 59% and from income tax made up 25%.

In 2024, the majority of property tax revenue, about EUR7.8 billion, came from Type B taxes, which apply to developed and undeveloped properties. Type A taxes are levied on agricultural and forestry assets. With new regulations and tax rates coming into effect in early 2025, municipalities are adjusting their strategies to maximize income.

The increase in property tax revenues has varied significantly among different states, with Hessen experiencing the most notable rise. From 2013 to 2023, Hessen's property tax income soared by 56.5%, reaching EUR1.4 billion in 2023. Such a dramatic increase highlights the state's proactive approach to managing property taxes.

Other states have also reported considerable gains. Saarland saw a 44.9% increase, accumulating EUR0.2 billion, while Rheinland-Pfalz recorded a 42.2% rise with revenues of EUR0.7 billion. In contrast, Sachsen experienced the smallest growth, with a modest 12.3% increase, yielding EUR0.54 billion.

This trend in property tax revenues reflects broader economic factors and the evolving landscape of real estate in Germany. As municipalities adapt to changing regulations and market conditions, the importance of property taxes as a revenue source is likely to remain significant.