Definition and Nature of Preferential Charges
In German law, preferential charges are a special form of levy imposed to finance public measures that confer a particular benefit (advantage) on certain properties. They are considered a type of benefit charge, but differ in their structure and legal classification. The legal definition and specific form of preferential charges are primarily set out in public-law provisions at the federal and state level.
Legal Basis for Preferential Charges
Statutory Foundations
Preferential charges are enshrined in several statutes. In particular, the following legal sources are relevant:
- Building Code (BauGB): Here, development contributions for the initial construction of development facilities such as roads, paths, and squares are regulated.
- Municipal Charges Acts of the Federal States (KAG): At the level of the federal states, the Municipal Charges Acts govern the collection of contributions for municipal infrastructure measures.
- Federal Water Act (WHG) and Water Association Acts: These provide the basis for contributions arising in connection with water management and water protection.
Preferential charges are therefore always laid down by statute; collection based solely on municipal ordinances is not permissible and requires statutory authorization.
Distinction from Other Levies
Preferential charges must be distinguished from taxes, fees, and other public-law levies. In contrast to taxes, preferential charges are collected as compensation for an economic benefit given to a property owner. The individual benefit of a measure is decisive for the collection and amount of the charge.
Typical Examples of Preferential Charges
Development Contributions
A central example is the development contribution under sections 127 et seq. BauGB. If a property is developed through the construction of a new road or benefits from the supply of water, sewage, or energy, the municipality charges a development contribution. This represents a typical preferential charge because it applies to properties that gain a measurable advantage from a public measure.
Road Improvement Contributions
Road improvement contributions are fees that must be paid by adjacent property owners for the renewal, improvement, or expansion of public roads or paths. They, too, are considered preferential charges because they are based on the special benefit for the adjoining properties.
Contributions under Water Law
Contributions under the Federal Water Act or state water laws for the maintenance of water bodies and protection against flooding are also preferential charges. Owners of properties that receive special protection from flooding may be required to help cover the costs.
Legal Structure of Preferential Charges
Factual Prerequisites
Certain conditions must be met to impose a preferential charge:
- Advantageous Situation: The property must gain a particular economic advantage from the measure.
- Affected Group: Preferential charges can usually only be levied on property owners or holders of hereditary building rights.
- Causality of the Measure and the Benefit: There must be a direct connection between the measure and the benefit to the property.
Determining the Benefit
The specific determination of the benefit is often based on the ‘contribution theory’. It involves identifying to what extent an individual property benefits from a measure. Relevant factors include the type and intensity of the property’s use, its size, and its location relative to the measure.
Calculation and Distribution of Contributions
The assessment of preferential charges generally follows the principle of benefit equity. This means that costs are distributed among those liable in proportion to the degree of advantage. The calculation basis typically includes property size, type of use, and distance to the measure. Details are governed by the relevant contribution-imposing ordinance, which is based on statutory law.
Legal Protection and Procedure
Assessment Procedure
The administrative act by which a preferential charge is assessed is subject to the general provisions of the Administrative Procedure Act (VwVfG) as well as the respective state laws. The charge is imposed through a written notice to the party liable for the contribution.
Legal Remedies
A person affected by the assessment of a preferential charge, as with any administrative act, may file an objection and, if necessary, a claim before the competent administrative court. In particular, objections may be raised to the amount, the determination of the benefit, or the legality of the measure.
Limitation Periods
The time limits for assessing preferential charges are governed by municipal charges law and the Fiscal Code (AO). The precise period depends on the type of preferential charge and the relevant statutory provision.
Significance and Function of Preferential Charges
Preferential charges serve to allocate the costs of public measures from which only certain properties benefit on a causation basis. In this way, the equivalence principle of public charges law is maintained. They ensure the refinancing of municipal infrastructure projects and promote acceptance of such measures by the general public, as only the genuinely benefited parties are called upon to contribute.
Distinction and Related Terms
Preferential charges are considered in the context of benefit charges. The term benefit charges refers to levies imposed generally for advantages from public institutions or measures. Preferential charges are a special subcategory and have a close connection to specifically designated public measures and an individually attributable benefit. In contrast, general municipal taxes, for instance, do not require an individual benefit as a prerequisite for the levy.
Literature and Web Links
- Building Code (BauGB)
- Municipal Charges Laws of the Federal States
- Federal Water Act (WHG)
- Otto Mayer: Deutsches Verwaltungsrecht, 11th Edition
- Ernst-Wilhelm Luthe: Kommunalabgabengesetz. Commentary
This article provides a comprehensive overview of the legal foundations, the assessment, the distinction, and the significance of preferential charges in German law.
Frequently Asked Questions
When do public levies qualify as preferential charges?
Public-law levies are considered preferential charges if they are imposed on a property because of a specific benefit resulting from public institutions or measures. This includes, for example, contributions for the expansion and development of roads, sewer systems, water or supply lines, as well as recurring contributions, provided they are due to a specifically attributable benefit for the property. The critical legal point is distinguishing from other types of levies: Only those that pertain to the individual benefit and not the general public burden qualify as preferential charges. The assessment is based on special statutory foundations, such as the Building Code, the municipal charges laws of the federal states, or specific development laws, and always requires an individual beneficial position.
How are preferential charges enforced by law?
The legal enforcement of preferential charges generally occurs through an assessment notice issued by the competent authority, usually the municipality. The notice constitutes an administrative act under the administrative procedure laws and may be challenged by objection and action for annulment. If the notice becomes non-appealable or final, enforcement can proceed in accordance with the provisions governing the enforcement of administrative acts, usually by way of attachment. The principles of proportionality and legality of the cost calculation are of particular importance, as erroneous development contributions or assessment notices can be successfully challenged. The land register usually remains unaffected by the entry of the preferential charge in the form of a real encumbrance, as these act as public charges.
Who is liable to pay preferential charges?
The person generally liable to pay preferential charges is the legal owner of the encumbered property. Ownership within the meaning of the Civil Code (§ 94 et seq. BGB) is decisive. In the case of hereditary building rights, allocation is made according to law or contractual agreement. If the property is sold, the new owner may be liable and, under certain circumstances, the former owner as well if the obligation arose during his period of ownership (according to the so-called benefit principle). In the case of communities of heirs or partnerships, joint and several liability applies.
How do preferential charges relate to other encumbrances on property?
Preferential charges occupy a special ranking because they are public-law encumbrances and, according to statutory provisions, are often given priority over private law encumbrances (such as mortgages or land charges). Their legal nature as public-law monetary obligations distinguishes them, for example, from private easements or land charges. In the case of forced sale, preferential charges, insofar as entered as a public charge in the land register or mandated by law, are deducted from the sale proceeds before land charge holders are satisfied.
What legal remedies and deadlines apply against preferential charge notices?
Affected parties may file an objection against a notice of assessment of preferential charges, provided the respective state law allows; otherwise, a direct action may be brought before the administrative court. The deadlines are governed by state law and are generally one month from the service of the notice. If instructions on legal remedies are omitted or incorrect, the deadline is extended to one year. The action is usually aimed at the annulment or modification of the assessment notice. In addition, deadlines for the substantive assessment of the charge—so-called assessment limitation periods—should be noted, which generally amount to four or five years.
Can preferential charges become time-barred and how is limitation regulated?
Preferential charges are subject to assessment and payment limitation periods. The assessment limitation period begins at the end of the calendar year in which the obligation arose and, depending on state law, generally lasts four or five years. After this period, the authority can no longer assess the preferential charge. For charges already assessed, the payment limitation period applies, which (according to § 228 AO as federal law, applied by analogy) is generally five years. During this time, payment must be requested and, if necessary, enforced by compulsory measures. Interruptions such as deferral or legal enforcement suspend the running of the limitation period.
In what cases is exemption or reduction of preferential charges possible?
An exemption or reduction from preferential charges is generally only possible based on express legal provisions, for example, if the benefit does not actually materialize, such as in the case of unusability of the public facility, or if the liable party proves that the property receives no benefit or only a very limited benefit from the measure. There may also be hardship provisions if collection of the preferential charge would cause unreasonable hardship. The details are governed by the municipal charges laws and relevant ordinances of the municipalities, with an application and justification usually required and an individual case review by the authority necessary.
