How does Grundsteuer (property tax) work in Germany?

Grundsteuer is an annual property tax levied by German municipalities on owners of land and buildings. Following a Federal Constitutional Court ruling in 2018 that the old valuation basis was unconstitutional, a nationwide Grundsteuer reform took effect on 1 January 2025. All properties were reassessed using new Grundsteuerwerte (property tax values) based on updated land values and building data submitted by property owners in 2022.

The tax is calculated in three steps. First, the Grundsteuerwert is determined by the Finanzamt based on property type, location, area, and year of construction. Second, the federal Steuermesszahl (assessment rate) is applied to that value, resulting in the Grundsteuermessbetrag. Third, the municipality applies its own Hebesatz (multiplier), which varies widely across Germany. Frankfurt, Munich, and other cities set higher multipliers than rural areas. The final annual tax can range from a few hundred to several thousand euros depending on the property and location.

Bavaria, Baden-Württemberg, Hamburg, Hesse, and Saarland introduced their own state-level models under an opening clause, so the exact calculation method differs by state. Owners of rented property can pass Grundsteuer on to tenants as part of the Betriebskosten (service charges). Tenants can check the amount on their annual Betriebskostenabrechnung.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.