Decision of the FG Berlin-Brandenburg on the Market Adjustment Discount under § 198 BewG
The Berlin-Brandenburg Fiscal Court (FG) had to address the question of under what conditions a market adjustment discount should be applied in the tax assessment of real estate according to § 198 Valuation Act (BewG). The court’s examination particularly focused on which explanations and proofs are required to consider a market situation deviating from the standardized valuation method.
The following description is based on publicly accessible information, particularly on reports from Haufe (Source: https://www.haufe.de/steuern/rechtsprechung/marktanpassungsabschlag-nach-198-bewg-anforderungen_166_673872.html). The reasons and the tenor of the published decision are decisive; the concrete individual case is evaluated in relation to the specific circumstances of the dispute.
Valuation Framework: Proof of the Lower Common Value under § 198 BewG
Function of § 198 BewG in Valuation Law
§ 198 BewG opens the possibility to prove a lower common value if the statutory valuation model leads to a higher value than the price achievable on the market. This creates a correction possibility linked to substantiated proof and is not triggered merely by general references to an unfavorable market situation.
Distinction from Standardized Valuation
The standardized valuation methods work with generalized parameters and aim to ensure a consistent and practicable value determination. If a deviation from this is to be made, according to case law, proof is required that makes the claimed deviation from the typical market situation comprehensible and verifiable.
Market Adjustment Discount: Requirements for Justification and Proof
Conceptual Classification of the Market Adjustment Discount
A market adjustment discount aims to reflect special market conditions or property-specific marketing obstacles that reduce value, if they are not or not sufficiently reflected in the assessed value. The dispute was about whether and to what extent such a discount can be considered within the proof under § 198 BewG.
Standard of Judicial Review
According to the decision of the FG Berlin-Brandenburg, it is not sufficient to merely calculate a market adjustment discount or generally refer to market conditions. What is required is a sound derivation that shows on which market observations, comparison data, or other materially relevant facts the discount is based and why it is justified precisely at the assessed level.
Substantiation Instead of General Value Correction
Based on the reported decision, the FG clarifies that a market adjustment discount cannot be understood as a freely selectable correction item. As far as the discount is based on peculiarities of the specific object or its marketability, these peculiarities must be specifically named and their influence on the market value comprehensibly quantified. General or schematic discounts are not sufficient for this.
Significance of the Decision for the Practice of Proof
Requirements for the Comprehensibility of Value Determination
The decision emphasizes the importance of a methodically understandable and verifiable value determination. A claimed lower common value must be presented in such a way that the financial administration and, if applicable, the court can verify the derivation of the result. This includes, in particular, that value-influencing parameters and their weighting are transparently disclosed.
Case-Specificity and Limits of Transferability
As is usual with fiscal court decisions, the assessment is closely related to the specific facts of the case. Whether a market adjustment discount can be considered under § 198 BewG depends on the conditions of the respective property, the market situation, and the quality of the evidence presented. A schematic transfer to other cases is therefore not indicated.
Classification by MTR Legal Attorneys
The decision of the FG Berlin-Brandenburg makes it clear that when asserting a lower common value under § 198 BewG, increased requirements for presentation and proof may apply if a market adjustment discount is used. This can be significant for companies, investors, and wealthy individuals in the context of tax valuations, especially when value assessments are disputed or a deviation from the standardized procedure is considered.
Those who wish to clarify legal questions in the tax context will find further information on Legal Advice in Tax Law at MTR Legal Attorneys.
