The Hebesatz is the percentage multiplier that a German municipality applies to a federally calculated tax base to produce your final property tax or trade tax bill. Every city, town, and village sets its own number, which is why two otherwise identical properties or businesses in different locations can owe very different amounts. The federal tax office decides what a property or business is worth for tax purposes; the local council decides how hard that value gets multiplied.
Why Each Municipality Sets Its Own Rate
Local control over the Hebesatz is constitutionally protected. Article 28 of the Basic Law guarantees municipalities the right to regulate local affairs on their own responsibility, and that guarantee expressly extends to financial autonomy, including tax rates.1Gesetze im Internet. Basic Law for the Federal Republic of Germany – Section: Article 28 No federal ministry approves or rejects a municipality’s choice. Berlin, a small Bavarian village, and an industrial city in North Rhine-Westphalia each pick their own number, and the multiplier is the main lever they use to balance budgets, fund infrastructure, or compete for businesses.
Because the rate can change annually, it works as a responsive policy tool. A city facing rising costs can raise the multiplier to close a budget gap. A town chasing industry can lower the trade tax rate and accept tighter finances. Increases are rarely popular, though, and councils that push too high risk pushing residents and businesses toward cheaper neighbors.
How the Hebesatz Fits Into the Property Tax Calculation
German property tax splits into three categories, and a municipality can set a different Hebesatz for each:
- Grundsteuer A applies to agricultural and forestry land.2Germany Trade & Invest. Taxation of Real Estate – Section: Real Estate Tax
- Grundsteuer B covers all other real estate, developed or undeveloped, including residential and commercial. It generates the bulk of most cities’ property tax revenue.2Germany Trade & Invest. Taxation of Real Estate – Section: Real Estate Tax
- Grundsteuer C, new with the 2025 reform, targets undeveloped land that is ready to build on. Cities can set a higher Hebesatz here to discourage speculation and push owners to build.3Hamburg.de. Our Path to a Fair Property Tax
The math runs in three stages. First, the federal tax office sets the assessed property value, the Grundsteuerwert. Second, that value is multiplied by a small federal tax rate called the Steuermesszahl to produce the base tax amount, the Steuermessbetrag. Under the federal model, the Steuermesszahl is 0.034% for commercial and undeveloped properties and roughly 0.031% for residential buildings.2Germany Trade & Invest. Taxation of Real Estate – Section: Real Estate Tax Third, the municipality multiplies that base amount by its Hebesatz.
A worked example. Take a home with an assessed value of €200,000. At a Steuermesszahl of 0.031%, the base tax amount is €62. If the local Hebesatz is 500%, the annual property tax comes to €310 (€62 × 5). Move the same property to a town with a Hebesatz of 732% and the bill jumps to €454. The federal steps keep the base small; the Hebesatz is what scales it into a real number.
One boundary worth flagging. Not every state uses the federal valuation model. Baden-Württemberg, Bavaria, Hamburg, Hessen, and Lower Saxony have adopted alternative assessment systems under an opening clause, and Saarland and Saxony apply different base rates.2Germany Trade & Invest. Taxation of Real Estate – Section: Real Estate Tax The Hebesatz step works the same in those states, but the base amount it multiplies may be calculated differently.
Trade Tax Uses the Same Mechanism
Businesses face a separate local levy, Gewerbesteuer, that also runs through a Hebesatz. Federal law sets a floor: the municipal multiplier for trade tax cannot drop below 200%.4Federal Ministry of Finance. An ABC of Taxes – Section: Trade Tax There is no ceiling.5Germany Trade & Invest. Trade Tax The floor exists to stop municipalities from effectively zeroing out trade tax to poach businesses from their neighbors.
The calculation mirrors the property tax pattern. Taxable trade income is multiplied by a uniform federal base rate of 3.5% to produce the base tax amount. The municipality then applies its Hebesatz. Most major cities land between roughly 400% and 500%, giving effective trade tax rates in the range of 14% to 17.5% on trade income. Smaller towns often stay closer to the 200% floor.
Two features change what businesses actually pay. Sole proprietors and partnerships get an annual trade tax allowance of €24,500; only income above that threshold enters the calculation, and corporations do not receive the allowance at all. Sole proprietors and partners can also partially offset trade tax against personal income tax under Section 35 of the Income Tax Act, with a credit of up to four times the Steuermessbetrag (the base amount, before the Hebesatz is applied). In municipalities with moderate rates, that credit can neutralize most of the trade tax. In high-rate cities, the credit covers a smaller share, and the business bears a real net cost. That gap is where the Hebesatz hits business owners hardest, because the credit is calculated from the pre-multiplier amount while the tax itself uses the post-multiplier amount.
Why Most Hebesatz Numbers Changed in 2025
A new federal valuation model took effect in January 2025, replacing assessed values that had been frozen at 1964 levels in western Germany and 1935 levels in the former East. Property values are now freshly assessed using current standard ground values and, for developed land, standardized construction cost data adjusted for building age.2Germany Trade & Invest. Taxation of Real Estate – Section: Real Estate Tax
The reform was designed to be revenue-neutral for municipal budgets, and hitting that target forced most cities to change their Hebesatz. The recalculated values often produced a lower total base assessment across a municipality, so councils raised the multiplier just to collect the same revenue. Bonn increased its Grundsteuer B rate from 680% to 732% for 2025 to maintain its projected €102 million in property tax revenue.6City of Bonn. Property Tax Reform: Revenue Neutrality Requires Assessment Rate Adjustments A higher number on your notice does not automatically mean a higher bill than before; it may just offset the differently calculated base.
The reform has also drawn many objections to the new assessed values, and if enough succeed, the total assessment volume could shrink further, potentially forcing another rate adjustment or opening a budget shortfall.6City of Bonn. Property Tax Reform: Revenue Neutrality Requires Assessment Rate Adjustments
How the Rate Gets Set Each Year
Setting the Hebesatz is a formal political act. The elected municipal council votes on the rate as part of the annual budget resolution, the Haushaltssatzung.7Stadt Erlangen. New Assessment Rate for Property Tax B Adopted Council members review projected revenues and expenditures and adjust the multiplier accordingly, usually with public hearings and open debate. Once the budget resolution passes, the new rate binds every taxpayer in the jurisdiction, and updated assessment notices go out.
Challenging the Number on Your Notice
This is where taxpayers most often go wrong, because the system issues two separate notices and only one of them can fix a given problem. The federal tax office sends the Steuermessbescheid, which sets the assessed value and the base tax amount. The municipality sends the Grundsteuerbescheid, which multiplies that base amount by the local Hebesatz.
If you think the assessed value is wrong, you have to challenge the Steuermessbescheid at the federal tax office, not the local bill. Under the Fiscal Code, the base assessment notice is binding on the final tax bill, so an objection to the local notice will be rejected when the real problem lies in the underlying valuation.8Federal Ministry of Finance. Fiscal Code (Abgabenordnung) – Section: Section 351(2) Challenge the local bill only if the municipality applied the wrong Hebesatz or made an arithmetic mistake.
The deadline is one month from the date you receive the notice.9Finanzämter Baden-Württemberg. How Can I Defend Myself Against a Tax Assessment Miss it and you lose the right to contest the figures, even if the valuation is clearly off. The objection itself can be a simple letter to the issuing office stating that you disagree; detailed legal reasoning can follow later, but the filing has to be inside the one-month window.