When the communities around Munich discuss the budget, Grünwald is always an issue. The local politicians always squint a bit jealously at the bubbling fabric tax revenue in the Isar valley, while they themselves have to cut costs and count whether they can even afford the new school building. They then curse the local multiplier of 240 a little, which makes it so attractive for companies to settle there. Grünwald demands the least from companies in the Munich district. However, the municipality is not alone at the top of the longing places for low-tax payers. Graefelfing, Straßlach-Dingharting, Oberhaching (all 250) and Pullach (260) happily join the ranks of the extremely low assessment rates. Some have been doing so for many years, others have only recently lowered the tax and make the city of Munich look pretty expensive with their tax rate of 490. But not every municipality has been financially well off in the past from such tax dumping.
17 years ago, the municipality of Schäftlarn decided to sharply lower the assessment rate for trade tax: from 320 to 260. Grünwald was already at an unbeatably low level back then. And Schäftlarn’s largest trade taxpayer, the fund company BVT Life Bond Management based in Hohenschäftlarn, threatened to migrate to Grünwald. So the tax rate was lowered. Not everyone on the council thought so at the time. Some warned against being blackmailed and spoke of coercion. Four years later, Schäftlarn returned to the 320 percentage points. The trade tax had collapsed, and a repayment of 2.9 million euros was a problem for the community. BVT Life Bond Management is now based in Grünwald.
That doesn’t stop other communities around the tax haven on the banks of the Isar from vying for business favors with a similar business-friendly tax policy. The small Straßlach-Dingharting, only seven kilometers away from Grünwald, has lowered the assessment rate twice in the past two years. From the original 310, the municipality reduced this factor to 280 in 2020 in order to increase its attractiveness in competition with its large neighbor. A year later, a further step was taken to 250.
Mayor Hans Sienerth (independent) is satisfied with this decision. Although the community isn’t suddenly awash with money, 60 new companies have settled here. And although the individual companies are now paying less tax, trade tax revenue has increased, says Sienerth. But he also admits that this happened as a one-off effect, with a company selling some of its divisions. It therefore remains to be seen whether Straßlach-Dingharting will benefit from the decision in the long term.
Straßlach-Dingharting made a conscious decision to stay ten percentage points ahead of Grünwald. “We had developed a new business park and free space,” says the mayor. “The companies that come should also earn their money with us.” It was not planned that mailboxes would be created, but real office space.
Strasslach: presentation of newly designed ponds. Mayor Hans Sienerth is sitting on the longest bench in Strasslach, cut out of a fallen tree on the bank’s edge
(Photo: CLAUS SCHUNK 01716/Claus Schunk)
The municipal council of Oberhaching also had this in mind when it lowered the assessment rate for trade tax in 2017. At that time, compared to many other municipalities in the district, it was a smooth 270, but with 250 from then on, the municipality finally came even closer to its neighbors from Grünwald. Overall, Oberhaching is not a poor municipality, but it accumulated a lot of debt five years ago due to high investments in geothermal energy. At the time, the treasurer had calculated that the reduction in the assessment rate would mean that 1.38 million euros less would flow into the cash register. At that time, he expected 17.4 million trade tax revenues, and 22.3 million are included in the 2022 budget.
Oberhaching’s business promoter, Alexander Maierhöfer, does not believe that the settlement of companies will benefit from the low tax rate alone. “It only has a symbolic function,” he says. The good accessibility, the proximity to Munich and the area code 089 sometimes played a bigger role. Nevertheless, Oberhaching has vacancies in the commercial area. “The hut is not really full,” says Maierhöfer. Companies did not simply change location, otherwise they risked losing employees. And if the specialists just want to go “downtown”, i.e. prefer to work in the middle of Munich, then the S-Bahn and the area code are of no use either. In Oberhaching, commercial properties with a chance of expansion are particularly attractive. Letter box companies, on the other hand, he has not yet noticed. In the 2020 local election campaign, the FDP had called for the tax rate to be reduced to 230 in order to become “Bavaria’s tax haven”. Maierhöfer doesn’t think much of this competition to the bottom. “We deliberately stayed above Grünwald with the tax rate,” he says, “if you pay attention to the last cent, you should go somewhere else.”
In Graefelfing, people are already talking about tradition with a view to the tax rate. It has been below 300 percent since 1968, only once, from 1976 to 1980, was it 300 percent. “We’re doing well with it,” says Mayor Peter Köstler (CSU). The income is bubbling up. Last year alone, income from trade tax amounted to 165 million euros. In the previous year it was even 185 million, this year the combing department is planning with 140 million euros.
In Graefelfing, 120 of the 165 million in trade tax goes to a company
“We don’t advertise that companies come to us,” says Mayor Köstler. The municipality relies on down-to-earth economic and location policies. Possibly letterbox companies would also contribute to the trade tax revenue in Gräfelfing, “they are not among the big players,” says the mayor. Of the 165 million euros in trade tax revenue, 120 million euros came from one company alone. It is an open secret that the Philipp Morris company is behind the high payments. And since 2012 she has resided in a real high-gloss office on the edge of the commercial area. The other ten largest trade taxpayers are all companies in larger buildings, says Köstler.
As in Schäftlarn, it was also a large company in Pullach, Hannover Leasing (HL), that in 2005, with the announcement that it only wanted to expand in Pullach under changed fiscal circumstances, reduced the trade tax rate from 300 to today still valid 260 percentage points. The HL also argued with Grünwald where important competitors of the HL were based. Pullach can live well with their tax rate today and he currently sees no reason to readjust, says Treasurer Andre Schneider. However, the rate of assessment is not the only criterion for companies when choosing a location, the quality of the location also counts, and Pullach, like Grünwald, is an attractive location.
In any case, the business model of the municipality of Pullach is different from that of tax havens, where letterbox companies are reported, for which only the level of the tax rate is decisive. No virtual offices have settled in Pullach, but large companies such as Linde, Sixt, HL or the LHI Group, which are also represented in the community with their employees. For 2022, the municipality expects income from trade tax of 55 million euros. The overall budget will be 124 million euros. In 2005 the budget was still 28.2 million euros.