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FINANCE

Merkel calls for global financial market tax

German Chancellor Angela Merkel on Wednesday renewed her call for a tax on international financial markets, insisting she would not give up the fight despite hefty opposition from her global partners

Merkel calls for global financial market tax
Photo: DPA

“We will continue to work for a tax on the financial markets,” Merkel said in a stormy debate in parliament on her government’s 2011 budget.

“The finance minister is doing this in several discussions and we are going to try to persuade as many countries as possible. Unfortunately, the world is not always as we would wish … but we are not going to give up,” she added.

At a meeting of European Union finance ministers earlier this month, members of the 27-country bloc clashed over the idea of imposing a tax of financial market transactions in Europe.

The proposal, driven by France and Germany and aimed at clawing back billions of euros given to banks in the financial crisis, has run into stiff resistance from several countries, notably Sweden and Britain.

At the level of the Group of 20 developed and developing nations, there is still more discord, with Canada and emerging market economies leading the battle against it. A G20 summit takes place in South Korea in November.

“We are sticking to the principle that every product, every actor, every financial market participant should be regulated so that we have an overview of what is happening on the financial markets,” Merkel said.

In the face of sustained heckling from opposition parties, Merkel trumpeted the achievements of the German economy that has bounced back strongly from last year’s recession, which was the worst in modern history.

“We are once again the growth engine of Europe,” Merkel said, adding that unemployment in the continent’s biggest economy could soon fall under the three-million mark.

“There is good reason to be optimistic,” added the chancellor, to jeers from the opposition.

Sigmar Gabriel, head of the centre-left Social Democrats, opened the debate with a blistering attack on Merkel’s centre-right coalition.

“When you govern you essentially serve special interests,” he said, lambasting tax cuts for hotels and the decision to extend the phase-out of the country’s nuclear reactors. “You have no idea about the common good in Germany.”

The Greens’ parliamentary leader Jürgen Trittin also dismissed suggestions that Merkel’s beleaguered government of conservative Christian Democrats and pro-business Free Democrats deserved credit for Germany’s impressive economic rebound in recent months.

“There’s a lot of (Chinese premier) Wen Jiabao and very little Merkel in the development of the labour market,” he said, referring to the surging demand from China for German industrial goods.

AFP/DAPD/mry

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PROPERTY

EXPLAINED: The German property tax declaration owners need to know about

Property owners in Germany will have to send the tax office an updated declaration of their property values this year, to help calculate a new amount they’ll have to pay in tax. We explain what they’ll have to do.

EXPLAINED: The German property tax declaration owners need to know about

People owning property in Germany, from individuals who might own their home to commercial landlords, may have recently come across advisories from tax consultants or media stories, telling them they’ll have to submit a new declaration to the tax office as to their property’s value.

Interactions with German bureaucracy – especially the tax office – can be intimidating, but there’s a few easy steps to follow if you have to declare.

Who has to declare, when – and why?

In 2018, Germany’s highest court declared the country’s current laws on property tax (known as Grundsteuer) unconstitutional, partly because the property values currently used to calculate what an owner owes are seriously out of date.

West German properties were last assessed for tax purposes in 1964, and East German ones in 1935.

The constitutional court gave the government until the end of 2019 to come up with a new way of calculating the tax for Germany’s 36 million properties.

That’s why owners are being asked to send in new declarations, based on values as of January 1st 2022.

The tax office will then use those declarations to determine what new tax rates owners will have to pay for their properties. Although they may end up having to bear some of costs of higher property tax later, tenants don’t have to declare anything – just owners.

Owners have between July 1st and October 31st of this year to send in updated information electronically to the tax office.

READ ALSO: Update: What you need to know about the German property tax reform that affects us all

What information do I need?

Each of Germany’s 16 federal states are allowed to have slightly different regulations in the property tax reform, so be sure to check what specific regulation governs you. That said, a few key documents will help you to provide an updated property value to submit.

Extract from the land register (Grundbuchauszug): For people who purchased their property prior to January 1st 2022, this may be the best option to get the most up to date valuation possible that the tax office will accept. The federal government’s dedicated website on the updated property tax declaration also strongly recommends you have this document in particular. You can get this record by making an appointment with your land registry office, or Grundbuchamt. Each individual district, or Bezirk, will have one. You often have to make appointments with them beforehand to request documents, so call them up or email them to request a time.

Last assessment notice (Einheitswertbescheid), purchase contract, or construction documents: A few other documents, particularly for more recent purchases, will help you fill in the declaration. Construction documents may have been included with your purchase contract, and your local tax office will have sent you an assessment notice after you took possession of your property.

These documents will help you answer a few key questions on the electronic declaration, including what year the property was built, its size, number of parking spaces or renovation year. All of these will end up being relevant for the final declaration.

When will the new rate come into effect?

Tax experts say it may take until late 2024 for the new rates to be calculated. The federal government will decide on a base before each individual state may adjust their rate slightly through state law. That’s why it might take some time to tell owners what their new rates will be, with them expected to come into effect on 1 January 2025.

Until that date, owners can continue paying what they are currently paying with no changes.

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