Following the land tax overhaul, Bremen's revenues drop by a significant 3.5 million euros
In the heart of northern Germany, the city of Bremen is undergoing a significant change in its property tax system. The reform, instigated by a 2018 ruling from the Federal Constitutional Court, is influencing property values and tax obligations for residents and property owners alike.
The new reform introduces a location factor, which significantly impacts property tax calculations. This adjustment has brought relief to residential properties in Bremen and Bremerhaven, but it also means updated valuation declarations and potentially higher or adjusted taxes for homeowners.
All real estate in Bremen is being revalued for property tax purposes. The Bremen tax authority has assessed the values of 237,000 properties, including 35,000 in Bremerhaven. This revaluation process has created some administrative and legal complexity, with around 47,900 objections against new property tax bills and assessment values being filed in Bremen.
The reform has brought a significant change in the tax base calculation, leading to ongoing appeals and legal clarifications. The Federal Tax Court has shown some skepticism and doubt about aspects of the reform, while updated administrative guidance and jurisprudence have been incorporated to help apply the new rules. This dynamic legal environment highlights the ongoing nature of these changes as they phase in.
Despite some initial concerns, the Bremen Senate has taken steps to favour residential properties. Predefined tax rates have been adjusted via state law to ensure that their share of the total property tax remains at 53%. The city of Bremen has set the property tax rate for property tax B at 755%, while Bremerhaven has set its rate at 896%.
Properties in desirable locations have significantly higher soil values than those in less favourable areas or neighbourhoods. This location factor plays a crucial role in the new property tax calculations.
The potential maximum rent increase of 10% for new tenancies would have been counteracted by the initial property tax increase. However, the actual implementation of tax relief remains a case-by-case decision.
As of the end of June 2025, the Bremen tax authority has collected 3.5 million euros less in property taxes compared to the previous year. Yet, the total amount remains uncertain due to pending decisions and appeals. Despite the city's assurance not to collect more property tax than before the reform, the final determination of property tax for all properties is still pending.
In summary, property tax collections in Bremen are proceeding under a new valuation framework but with active legal and administrative adjustments due to appeals and the complexity of the reform. The city of Bremen continues to navigate this transition, aiming to strike a balance between fair property taxation and economic stability for its residents.
The significant adjustment in the property tax system, influenced by the location factor, has consequences for numerous industries and businesses in Bremen, as real estate valuations and tax obligations change dramatically. The ongoing legal and administrative complexities might also impact the finance sector, as they deal with pending decisions and appeals regarding property tax bills.
