What is the assessment rate?
In municipal tax law, the rate of assessment is the term for a factor that is multiplied by the tax base amount to determine the tax liability. In Germany, a rate of assessment is provided for in the case of trade tax (§ 16 GewStG) and real estate tax (§ 25 GrStG).
There are three sets of assessment rates:
- For property tax A (for farms and forestry)
- For property tax B (for most other properties)
- For trade tax (Gewerbesteuer)
The local council decides on the amount of the respective surcharge. The assessment rates are determined autonomously by the local authorities to determine the tax rates for agricultural and forestry operations (land tax A), other land plots (land tax B) or taxes payable as a trader (trade tax).
A higher rate of leverage means that the municipality receives more tax revenue, but is at risk of becoming less attractive for businesses (in the case of trade tax), farmers (land tax A) or building owners (land tax B) compared to other municipalities.
The rates of assessment for the land and trade tax are regularly laid down in the municipal budget statutes for a financial year (= calendar year) and can therefore be changed every year. They are referred to as "percentage rates", i. e. percentages. For example, if a rate of assessment is 350%, the tax base is multiplied by 3.5.
The amount of the tax base is determined by the fiscal authorities with binding effect for the local council representation.
