Back in 2018, the property tax system in Germany was unconstitutional, given that it was based on outdated values. We're talking like 1935 in the east, and 1964 in the west, so wildly outdated.

Property tax in Germany is decided at the state level. There's a federal law (Grundsteuergesetz (GrStG)), which the states can follow, or they can go off and do their own thing.

Berlin followed the federal law, but changed the tax rates as outlined in Berliner Grundsteuermesszahlengesetz - BlnGrStMG. In §1 of the Berlin law, you can see that Berlin sets:

• 0.45‰ promille (0.045%) for undeveloped land
• 0.31‰ promille (0.031%) for residential properties (§249 Abs. 1 Nr. 1-4 of the Valuation Law)
• 0.45‰ promille (0.045%) for commercial properties (§249 Abs. 1 Nr. 5-8)

Some states (Hamburg/Munich) did their own thing and made regressive taxes that punish density or commerce.

But one state did its own thing and was cool: Baden-Württemberg. Their property tax is now a full Land Value Tax (LVT). So no changes in tax based on land developments, just the land value. You can find the law "Landesgrundsteuer Baden-Württemberg (LGrStG BW)" here (or in PDF form here but I'm not sure what this link is).

If me (and https://claude.ai) are reading the law right, the formula for the tax is roughly:

Property Tax = Land Value × Tax Measurement Number × Municipal Multiplier

Land value is the assessed price per square meter, by the land area.

The tax measurement number (Steuermesszahl) according to §40 of the law is:

• For agricultural/forestry properties: 0.55‰ (0.055%)
• For regular properties: 1.3‰ (0.13%)

The Hebesatz (Municipal Multiplier) allows local adjustment of the tax rate while maintaining relative property values.

There's also reductions to the Tax Measurement Number:

• 30% reduction for properties predominantly used for residential purposes
• Additional reductions of 25% for subsidized housing
• Additional reductions of 25% for properties owned by public housing companies
• 10% reduction for properties with cultural monument status

Land value is determined using Bodenrichtwerte (standard land values), which are assessed by local valuation committees based on actual market transactions. Baden-Württemberg has BORIS-BW, which allows anyone to view the official land values in the state.

There's a great talk by professor Dirk Loehr to the Henry George School of Social Science that I can highly recommend. It has many interesting details, covering the legal situation of the previous unconstitutional property tax, the politicians in Baden-Württemberg that were in a position to pass a LVT law, and how they went about coalition building and convincing various different groups to support the measure. It also notes (at 1:45:40) how surprising that of all places Baden-Württemberg was the state where this was introduced, given it is generally politically conservative and doesn't have very advanced land valuation systems.

The law came into effect in January 2025, so I haven't found any reports yet on what changes have resulted. Also the level of tax is quite low, so I'm not sure how dramatic the effect will be.

However it's still a significant achievement for several reasons. First, it demonstrates that it's possible to implement a pure land value tax through democratic processes at a state level. Second, it establishes that LVT is constitutionally valid in Germany (an important hurdle, given that the previous property tax system failed this test). Third, it creates a real-world laboratory for studying the practical administration of land value taxation.

This pilot program will provide valuable empirical evidence about implementation challenges, particularly around land valuation methods, administrative costs, and public acceptance. These lessons will be invaluable for other jurisdictions considering similar reforms. While the immediate economic impact may be modest due to the low tax rates, the policy precedent set by Baden-Württemberg represents an important step toward broader adoption of land value taxation as a viable alternative to traditional property tax systems.