How can a law firm help with property tax?

New rules are being introduced for property tax. By the first main valuation date on 1 January 2022, a revaluation of all properties, as well as agricultural and forestry holdings, must be carried out throughout Germany. In future, valuation will be based on property tax values (or comparable values under state law) rather than the previous standardised values. Property owners will be required by the tax authorities to submit a declaration for the determination of property tax values. These values will be applied as the basis for property tax from 1 January 2025. How can tax practice firms contribute to the implementation of the property tax reform, and how can they assist their clients?

Germany faces a mammoth task. Around 35 million plots of land and agricultural and forestry holdings are to be revalued. For each plot of land and each agricultural or forestry holding, owners must submit a declaration of valuation to the tax authorities in electronic form in 2022. They will be requested to do so by the tax authorities in 2022. The valuation will be based on the market values as at 1 January 2022.

As the tax authorities will need several years to revalue all properties, the new values will not be used to calculate property tax until 2025. It is expected that tax practice firms will handle the property tax valuation declaration on behalf of the vast majority of their clients.

Support with property tax returns – the right software

There are a number of software partners who can assist with the declaration process. The software offering should be examined closely in this regard. A key question here is how property owners are involved in the data collection process. With the right solution, existing data is imported from the practice’s software, whilst any missing data is collected through interviews. Once the client has completed the data entry, the data is automatically imported into the relevant project in the tax software and finally approved by the client via the cloud using a legally valid digital signature. This avoids data discontinuities and eliminates time-consuming and error-prone double data entry.

It is also important to consider how the tax software is structured internally. Does it use a property tax taxonomy, similar to the e-balance sheet taxonomy, or are all functions programmed into the tax software? The property tax taxonomy available in the Opti.Tax product, contains all the data fields that ELSTER requires for the further processing of property tax data. Should ELSTER change the required data structure, the taxonomy automatically recognises the new fields. An incomplete data submission is detected during data validation prior to transmission. All ELSTER rules are already applied to the planned transmission data. For example: „Property type incorrect because it does not match the type of economic unit“. If the Opti.Tax validation no longer reports any errors in the project, the ELSTER submission process should also run without errors. This saves the tax practice a great deal of time.

Data collection – complicated or simple?

Determining the data fields for standard land value and net rent (excluding service charges) can present a further challenge. Property owners will only be able to provide these figures in exceptional circumstances. How does the Opti.Tax tax software support this? In the property data field, the required data is retrieved via an interface, i.e. the geo-portals of the individual federal states. The property address is then already in the clipboard. The property can now be found very easily by pressing Ctrl+V in the search bar. If the data cannot be obtained via the web app either, the standard land value can be requested from the relevant local authority with a single click.

The individual federal states are still refining the information provided. In North Rhine-Westphalia, the information is already quite comprehensive. In Hamburg, the tax consultancy does not need to provide the standard land value. A similar approach applies to the net rent excluding charges. Here, too, the tax consultancy can save a great deal of time compared with manual research.

Property tax with no change in tax base

Furthermore, the application generates the ELSTER forms. Once the client has provided their current property tax values during the cloud interview, these are compared in the report. As the label suggests, the „Send documents to client for approval“ button can be used to request approval from the client. This is done entirely digitally, without any media breaks. This is made possible by the integration of d.velop sign into Opti.Tax. Within a short time, the documents signed with a legally valid digital signature are returned and can be sent via the ELSTER Rich Client. This ensures legal certainty and client involvement in the most convenient way possible, from data entry right through to the ELSTER submission process.

Once sent, the final documents are automatically made available to the client for download in the cloud. And to ensure that Opti.Tax Property Tax works seamlessly with all standard practice software solutions, a number of interfaces for the most common products – such as DATEV, Wolters Kluwer, etc. – are included. When creating a new project, existing property data (asset management, Annex V, etc.) is retrieved – for example, from DATEV – if the client is already known. The final documents are also transferred to the DMS for archiving. This ensures that all staff at the firm have access to the documents.

Law firms are indispensable when it comes to property tax

Without tax practises, implementing the property tax reform would be virtually impossible. Clients rely on the support of their tax advisers to meet the technical requirements for the assessment declaration. However, this also means that tax practises must adapt to the property tax reform in all areas. On the one hand, by building up their expertise; on the other, by selecting, in good time, a high-performance, future-proof and particularly efficient software solution.

This is because, given the enormous workload involved, the time and cost savings offered by the software increase exponentially. Law firms should therefore pay particular attention to two points. Firstly: purchasing software that eliminates data discontinuities, takes the firm’s requirements into account and offers interfaces with more than just DATEV. Secondly: ensuring timely communication with clients. After all, a heavy workload also means significant revenue potential.