Appeal (Tax Office)

Appeal (Tax Office) - An appeal (Section 347 of the German Fiscal Code) is a formal legal remedy against tax assessment notices and other administrative acts issued by the tax office. Property owners frequently file appeals against erroneous property tax assessment notices, income tax assessments (Annex V - Rental Income), real estate transfer tax assessments, or inheritance tax assessments. The appeal must be filed within one month of the assessment’s notification and is the mandatory preliminary procedure before filing a lawsuit with the tax court.

Procedure and Deadlines

Appeal Deadline

• 1 month after notification of the assessment (notification: 3 days after mailing, § 122(2) AO)
• For electronic notification (ELSTER): 3 days after availability in the mailbox
• Missed deadline: reinstatement to the previous status (§ 110 AO) only in cases of failure through no fault of the taxpayer

Form

• In writing (letter, fax, email) or via ELSTER
• No specific form required - a simple letter stating the notice, the file number, and the phrase “I am filing an objection” is sufficient
• The statement of grounds may be submitted later - however, it is recommended to submit it promptly

Effect

• The appeal has no suspensive effect - the assessed tax must be paid first
• Suspension of enforcement (AdV): Can be requested from the tax office (Section 361 AO) - the tax is then deferred until a decision is made

Typical grounds for appeal in the real estate sector

• Property tax assessment: Incorrect living area, incorrect standard land value, erroneous building data
• Income tax (Annex V): Non-recognition of income-related expenses, incorrect depreciation calculation, denial of the intention to rent in the case of vacancy
• Real estate transfer tax: Excessive tax base, failure to account for fixtures and fittings (built-in kitchen, awning)
• Inheritance/gift tax: Incorrect property valuation, failure to account for allowances or tax exemptions (family home under § 13 ErbStG)

Risk of a More Adverse Ruling

An important aspect that is often overlooked: During the appeal process, the tax office may also amend the assessment to the detriment of the taxpayer (§ 367 (2) AO). This so-called worsening of the decision is a real risk, especially if the appeal is poorly substantiated. Before issuing the appeal decision, the tax office must inform the taxpayer of the impending worsening of the decision and give them the opportunity to withdraw the appeal. If the appeal is withdrawn, the original assessment remains final. In complex tax matters-such as distinguishing between maintenance and construction costs or the 15% limit for acquisition-related construction costs-we recommend consulting a tax advisor before filing an objection to assess the risk of a worsening of the taxpayer’s situation.

Practical Tip for Property Owners in Nuremberg and Franconia

Following the property tax reform, many property owners in Nuremberg have received property tax assessment notices containing errors-incorrect living areas, outdated standard land values, or inaccurate building data. If your notice is incorrect, file an objection within the deadline-even if you haven’t yet finalized the exact grounds for your objection. An informal letter is sufficient for now: “I hereby file an appeal against the property tax assessment notice dated [date], Ref. [file number]. The grounds for the appeal will follow.” This ensures you meet the deadline and gives you time to review the notice. At the same time, request a stay of enforcement to avoid having to pay additional taxes until the matter is resolved. For properties in Nuremberg, the Nuremberg-South Tax Office (for properties south of the Pegnitz River) or the Nuremberg-North Tax Office is responsible.

Frequently Asked Questions

How do I file an appeal with the tax office?

Send an informal letter to the responsible tax office with the following information: your name and address, the file number of the notice, the date of the notice, and the statement: “I hereby file an appeal against the above-mentioned notice.” A statement of reasons is helpful but can be submitted later. The appeal can be filed by letter, fax, email, or via ELSTER. The deadline is one month from receipt of the notice-if sent by mail, the third day after mailing is considered the date of receipt, unless it is proven that the letter arrived later.

Do I have to pay the tax despite the appeal?

In principle, yes-the appeal has no suspensive effect. However, you can apply to the tax office for a stay of execution (AdV). The tax office will then suspend payment until a decision is made on the appeal if there are serious doubts regarding the legality of the notice. If your appeal is rejected and the suspension of enforcement is revoked, suspension interest (0.5% per month = 6% per year) will accrue on the suspended amount-this can add up significantly for higher tax amounts over longer periods.

What happens after the appeal?

The tax office reviews the appeal and has three options: remedy (the assessment is amended in your favor), partial remedy (partial correction), or appeal decision (the appeal is dismissed). If the appeal is denied, you can file a lawsuit with the tax court within one month-in Bavaria, the Munich Tax Court has jurisdiction over cases from Nuremberg. Note: Without a prior appeal, a lawsuit is generally inadmissible-the appeal is the mandatory preliminary procedure.

The objection is the most important tool for correcting erroneous tax assessments-especially following the property tax reform, which has led to a large number of erroneous assessments in Nuremberg as well as nationwide. Anyone who misses the objection deadline permanently loses the opportunity for correction and, in case of doubt, may end up paying too much property tax for years. If in doubt, always file the objection on time; the statement of reasons can be submitted later.

Real Estate Transfer Tax and Objections: Special Considerations

With real estate transfer tax, there is often potential for an objection when purchasing real estate if fixtures or movable assets (e.g., built-in kitchen, awning, garden tools) were sold together with the property. Under tax law, these items may be excluded from the tax base if they are listed separately in the purchase agreement. Tax offices do not always readily accept such breakdowns-in such cases, it is advisable to file an appeal with a detailed justification and documentation of the actual value of the excluded items. With a purchase price of 400,000 euros and a real estate transfer tax of 3.5% (Bavaria), correctly excluding inventory valued at 10,000-20,000 euros can result in tax savings of 350-700 euros-the effort involved in filing an objection pays off in many cases. We recommend discussing this with the notary when the purchase agreement is being finalized, as a clearly worded inventory clause in the contract prevents future disputes with the tax office.

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