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Why Germany is mulling an extension to property tax deadline

Federal Finance Minister Christian Lindner (FDP) is seeking talks with state leaders to arrange a possible extension to the deadline for submitting the new property tax declaration. Here's what's going on.

Construction site next to block of flats
A construction site and block of new-build flats in Stuttgart, Baden-Württemberg. Photo: picture alliance/dpa | Sebastian Gollnow

Under plans to reform how property tax is calculated, around 36 million homeowners in Germany have been asked to fill in a tax declaration this year. 

The deadline for submitting the new declaration is currently set to expire at the end of October. But according to Finance Minister Lindner, just a quarter to a third of property owners have completed their tax return so far. 

Speaking on the RTL/ntv programme Frühstart, the FDP politician said he would arrange talks with the state premiers this week in order to pitch a deadline extension of at least a few months. 

“My offer: we extend the deadline for submitting the property tax return by a manageable period of time,” he said.

Lindner said it was important to be “realistic” about the fact that some citizens, especially older property owners and pensioners, felt overwhelmed with the tax return. 

He also acknowledged that there had been problems with the software for submitting tax returns, which had added to homeowners’ woes. 

Reform has faced numerous hurdles

The new system will primarily calculate the tax rate using land value and rent, though states will be able to introduce other regulations.

Advocates of the change say the new system is fairer than the current one that bases the tax rate on the (often outdated) value of the property. 

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However, attempts to carry out the largest tax reform since the Second World War have hit numerous hurdles along the way, with property owners complaining of difficulties filling in and submitting the declaration.

There were also issues affecting the government’s Elster tax portal, which was overloaded with users in July after the tax offices started accepting property tax declarations. 

The problems have led to growing calls to extend the deadline until at least January 31st, 2023. 

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TAXES

Germany to extend (and increase) tax rebate for people working from home

Starting in 2023, people working from home will be able to deduct €1,000 per year for working from home, up from the previous annual amount of €600. Here's what you need to know.

Germany to extend (and increase) tax rebate for people working from home

This means that in future, 200 instead of 120 days devoted to ‘home office’ will be eligible for the €5 per day deduction, which was originally introduced amid the Covid pandemic in 2020 and was set to expire at the end of this year.

READ ALSO: Germany plans tax rebate for people working from home

The sum can be deducted regardless if a separate workspace is used or available – meaning it applies to employees working on their couches or kitchen tables.

“This especially relieves families with smaller flats, who don’t have the space available for an extra office,” according to a statement on the German government’s website.

Employees who do have a separate study, though, can furthermore claim €1,250 back on their taxes.

However, certain criteria must be met – for example, the room must be used exclusively for professional purposes and must be separable from the rest of the apartment.

All workers in Germany also receive a lump sum of income-related expenses, which can be deducted each year: that amount is going up by €200 in 2022, bringing the total to €1,200.

The higher working-from-home allowance is part of the Annual Tax Act 2022, which was discussed by the Bundestag Finance Committee on Wednesday, and is set to be approved on Friday.

In September, about a quarter of employees in Germany were ‘continuing to work from home’ after Covid-measures were relaxed, according to the Munich-based Ifo Institute.

READ ALSO: Who benefits most under Germany’s tax relief plans

More tax changes

The new tax law will also introduce an ‘excess profits tax’ (officially called the “EU energy crisis contribution”) for companies that make large profits from oil, natural gas, coal and refineries. 

People with larger incomes will also be required to pay the tax on the gas price cap, which is set to be paid out to residents early next year. 

Vocabulary

Deduct – abziehen

Workspace – (der) Arbeitsbereich/ (der) Arbeitraum

Lump sum – (die) Pauschale

Income-related expenses – (die) Werbungskosten

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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