The owner pays property tax (Grundsteuer) to the municipality: the law names as taxpayer the person to whom the property is attributed when its tax value is assessed (§ 10(1) GrStG). In commercial leases, however, the tenant usually bears the economic burden — if the lease expressly passes the tax on. Without such a clause, the tax stays with the landlord (§ 535(1) BGB).
The law makes the owner liable; the lease shifts the cost
The tax demand goes to the owner: as a rule, the tax is paid in four equal instalments — on 15 February, 15 May, 15 August and 15 November (§ 28(1) GrStG). The tenant reimburses it through the annual operating-cost statement, if the lease so provides. Commercial leases have no closed list of recoverable costs. But property tax is the first item in the Operating Costs Ordinance (§ 2 no. 1 BetrKV), so a clause that refers to that list covers it too. In our experience, food-store leases usually make the tax recoverable (see Part 10 of the series German Prime Retail).
Even an increase that passes to the tenant matters to the landlord. It raises the store's total occupancy cost, and that is the figure a chain looks at when deciding whether to renew (Part 10).
On a sale or a vacancy, the tax stays with the owner
The tax is fixed as at the start of the calendar year (§ 9 GrStG), so in the year of sale the seller remains liable to the municipality. The purchase contract splits the cost between the parties from the handover date (Part 8). If the tenant moves out, the owner pays. The law softens the blow: if the normal rental income falls by more than half through no fault of the owner, the tax is reduced by 25%, and by 50% if the income is lost entirely. The application is due by 31 March of the following year (§§ 34, 35 GrStG).
Since the 2025 reform, a supermarket's property tax depends on the state
Since 1 January 2025, the tax has been calculated on values as at 1 January 2022 (§ 266(1) BewG). The tax base is multiplied by a rate (Steuermesszahl), and the result by a multiplier set by the municipality (Hebesatz, § 25 GrStG). Under the federal model, a store is valued on a cost basis (§ 250(3) BewG), and its rate is higher than for housing: 0.34‰ against 0.31‰ (§ 15(1) GrStG). Several states apply their own models — among them Baden-Württemberg, Bavaria, Hamburg and Lower Saxony.
Exhibit 1. The tax base depends on the state: cost value, land value or floor area
Implications for investors
1. Check that the lease passes the tax on expressly. Without such a clause, the tax stays with the landlord; a clause that refers to the Operating Costs Ordinance covers it too.
2. Build the tax into your vacancy calculation. If the tenant moves out, the owner pays the tax. It is reduced by 25% if the normal rental income falls by more than half through no fault of the owner, and by 50% if that income is lost entirely — but only on an application filed by 31 March of the following year.
3. Watch increases even when the tenant pays them. A higher tax raises the store's total occupancy cost, and that is the figure a chain looks at when deciding whether to renew.
What to check:
• the lease clause on property tax and on who bears any increase;
• the notices of tax value and of tax under the 2025 reform (request them from the seller), and the municipal multiplier;
• how the purchase contract splits the tax for the year of sale;
• in a vacancy, an application for partial tax relief by 31 March of the following year.
See also: What is a double net lease?; What happens if a supermarket tenant moves out?; What taxes does a property-owning GmbH pay?
Sources: §§ 9, 10, 15, 25, 28, 34, 35 GrStG; §§ 250, 266 BewG; Landesgrundsteuergesetz Baden-Württemberg of 4 November 2020, §§ 38, 40; Bayerisches Grundsteuergesetz, Arts. 3, 4; Nordrhein-Westfalens Grundsteuerhebesatzgesetz of 5 July 2024, § 1; § 535(1) BGB; § 2 BetrKV; the series German Prime Retail, Parts 8 and 10. Legal position as of October 2026.
Photo: Jan-Philipp Thiele / Unsplash
This page is general information and not investment, legal or tax advice.