Like most federal states, the state of North Rhine-Westphalia will apply the federal model of property tax reform, with the exception that local authorities can set different assessment rates for residential and non-residential properties (e.g. commercial properties or undeveloped land). Until now, a uniform assessment rate has applied to both types of property, which can continue to be set in the future. The differentiation in the assessment rates, through which the individual use of the property plays a greater role in the future level of property tax B, offers the possibility of mitigating the additional burden on residential properties expected under the new law as a result of the new property tax, while the tax relief for non-residential properties could be less pronounced.

“In principle, we have a positive attitude towards differentiated rates of assessment because we naturally see the problem of making housing more expensive,” explains Mayor Katja Dörner. “However, there are considerable doubts about the legal certainty of implementation and we therefore consider the risk to be too high.” A legal opinion commissioned by the NRW Association of Cities and Towns sees constitutional risks for cities and municipalities. The city administration is therefore proposing a uniform assessment rate for property tax B to the city council. 

The legal risks result in high financial risks for the city of Bonn. If legal action is taken against the differentiated rates of assessment, the city administration calculates that this would result in a financial risk of up to 15.8 million euros for 2025 alone, pending clarification by the highest court, with a possible upward trend in subsequent years. This calculation is based on the collection rate recommendations of the state of NRW.

“This considerable risk can only be avoided by refraining from introducing differentiated property tax rates until the final clarification of their admissibility under constitutional law,” argues the administration in the draft resolution.

Following the fundamental decision on the assessment rates on November 12, the council will then decide on the assessment rates for 2025 and possibly 2026 at its meeting on December 12, 2024. A decision at a later date would mean that no property tax could be assessed at all from January 1, 2025 - with corresponding negative effects on the city's already strained financial situation.

Property tax is an important financial pillar for local authorities. Since the last increase in property tax rates on January 1, 2015, the revenue from property tax B in Bonn has increased from 92.2 million euros in 2015 to 98.7 million euros in 2021 and currently 99 million euros. For 2025, the administration is expecting property tax revenue of around 102 million euros. The annual revenue from property tax A for agricultural and forestry properties has fluctuated around 70,000 euros per year since 2015.

The draft resolution on the fundamental decision on the collection rates is published  here (opens in a new tab).