Revenue authority

Revenue Authority - In tax law, revenue authority refers to the right of a local government (federal government, states, municipalities) to collect the proceeds of a specific tax. In the real estate sector, revenue authority is particularly relevant to property tax and real estate transfer tax, as the revenue from these taxes is distributed differently among the federal government, states, and municipalities depending on the type of tax. Revenue sovereignty is significant for property owners because it clarifies which authority sets which assessment rates and which political decisions it can influence.

Revenue Sovereignty for Property-Related Taxes

An overview of revenue sovereignty for the most important property-related taxes:

Tax Type	Revenue Sovereignty	Assessment Rate Authority
Property Tax B (residential/commercial properties)	Municipalities	Municipalities (assessment rate)
Real Estate Transfer Tax	States	States (tax rate)
Income Tax (on rental income)	Shared between federal, state, and municipal governments	Federal legislature
Corporate Income Tax (for real estate companies)	Shared between federal and state governments	Federal legislature
Trade tax (for commercial real estate transactions)	Municipalities	Municipalities (assessment rate)

Property tax: Property tax is entirely the responsibility of the municipalities. They set the assessment rate independently-in Nuremberg, this was most recently 535% (Property Tax B). As a result of the 2025 property tax reform, the assessment figures will be recalculated nationwide, although Bavaria has introduced its own calculation model.

Real estate transfer tax: This tax is levied by the federal states. Bavaria has a comparatively low rate of 3.5% of the purchase price; other federal states levy up to 6.5%.

Significance of Revenue Autonomy for Property Owners

The concept of revenue autonomy has practical implications:

• Municipal financial situation influences property tax: Municipalities with strained budgets often raise the property tax assessment rate, which increases ongoing costs for owners and landlords (operating costs)
• Location selection: When making investment decisions, it can be useful to compare tax rates across municipalities-within the Nuremberg metropolitan region, tax rates vary, in some cases significantly
• State-to-state differences in real estate transfer tax: When purchasing a property near a state border (e.g., Bavaria/Thuringia or Bavaria/Baden-Württemberg), the real estate transfer tax may vary depending on the state

Property Tax Reform 2025: Impact on Property Owners in Bavaria

The property tax reform effective January 1, 2025, is relevant for all property owners in Bavaria. Bavaria has introduced its own area-based model, which differs significantly from the value-based models of other federal states. In the Bavarian model, the value of the property plays no role-instead, property tax is calculated based on the property’s area and the living space.

For property owners, this means that the new property tax burden does not increase proportionally to the rise in property value-unlike in a value-based model. At the same time, it is up to the municipalities to adjust the assessment rate. Many Bavarian municipalities have adjusted their assessment rates with the reform, so the total burden for property owners may have increased or decreased depending on location.

Practical Tip for Property Owners in Nuremberg and Franconia

With the 2025 property tax reform, all properties in Bavaria will be revalued based on the area model. We recommend that owners carefully review the new property tax assessments and file an appeal within the deadline if they have doubts about the calculation. The authority to set property tax rates lies with the City of Nuremberg or the respective municipalities-an increase in the assessment rate is possible at any time and directly affects your utility bill as a landlord.

We recommend keeping an eye on the development of the property tax assessment rate and factoring it into your rent calculations. As a landlord, you can pass on the property tax to the tenant as part of the operating costs statement-provided that this allocation is expressly agreed upon in the lease agreement.

Frequently Asked Questions

What does revenue authority specifically mean for my property tax?

Your municipality holds the revenue sovereignty for property tax. This means: The municipality sets the assessment rate by which the uniform federal assessment base (under the Property Tax Act) is multiplied. If the assessment rate increases, your property tax increases-regardless of whether the value of your property has changed.

Why is the real estate transfer tax in Bavaria lower than in other federal states?

Bavaria exercises its right as the authority with revenue sovereignty and has kept the tax rate at 3.5%, while many other states have raised it to as much as 6.5%. This is a political decision intended to strengthen Bavaria’s position as an attractive real estate location. For buyers in Bavaria, this means significant savings compared to, for example, North Rhine-Westphalia or Saarland.

How much is the property tax for a typical condominium in Nuremberg?

Following the 2025 property tax reform, the exact tax burden will be determined by the new Bavarian area-based model. As a rough estimate for an 80 m² apartment in Nuremberg, you can expect an annual property tax of approximately 200-500 euros-depending on the location and assessment rate. The exact amount will be specified in the new property tax assessment notice from your municipality.

As a landlord, can I pass on the property tax to the tenant?

Yes, according to the Operating Costs Ordinance (BetrKV), property tax is a recoverable operating cost, provided that the pass-through is expressly agreed upon in the lease agreement. In commercial leases, property tax is also typically passable on. An increase in property tax due to the assessment rate can therefore be passed directly on to the tenant.

What specific impact will the 2025 property tax reform have on landlords in Nuremberg?

For landlords in Nuremberg, the 2025 property tax reform requires practical action. Since Bavaria has introduced the area-based model, the tax base for property tax is changing structurally: instead of the unit value, land area and living space now count. For many older buildings in Nuremberg’s Wilhelminian-style neighborhoods, this means a shift in the property tax burden compared to new buildings with the same floor area. Landlords must incorporate the new property tax assessments into their operating cost statements and ensure that the lease agreements explicitly provide for a property tax apportionment-otherwise, increases cannot be passed on. We also recommend filing appeals against incorrect assessment notices within the deadline: In some cases, the tax authorities have based their recalculations on outdated floor area data, which can lead to overvaluation. A careful comparison of the actual living space and the data used in the assessment pays off.

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