Road improvement contributions; collection

Since 01.01.2018, contributions to finance the improvement or renewal of local roads, limited public roads, local thoroughfares and street lighting have no longer been levied in Bavaria.

With the law amending the Municipal Tax Act of June 26, 2018 (GVBl. No. 12 of 29.06.2018, p. 449 f.), the Bavarian State Parliament repealed the legal basis for the collection of road improvement contributions in Art. 5 para. 1 sentence 3 and Art. 5b of the Municipal Tax Act (KAG) with effect from January 1, 2018 and replaced it with a provision in Art. 5 para. 1 sentence 3 KAG, according to which contributions for measures for the renewal and improvement of local roads, limited public roads, parts of local thoroughfares for which municipalities are responsible and street lighting (road improvement contributions) will no longer be levied from this date (see LT-Drs. 17/21586).

This regulation applies to cases in which the factual contribution obligations had not yet arisen at the time the law came into force. In order to ensure that contributions can also no longer be levied in cases in which the factual contribution obligations had arisen at the time the law came into force but the personal contribution obligations had not yet arisen, accompanying provisions are made in Art. 19 Para. 7 KAG. In addition, transitional provisions in Art. 19 Para. 8 KAG deal with advance payments set before January 1, 2018.

The right and obligation of municipalities to levy development charges in accordance with Art. 5a KAG remain unaffected by this law.

Road expansion contributions, like development contributions, could reach a significant amount.

If the collection leads to particular hardship for the person liable to pay the contribution - even after the abolition of road improvement contributions on 31.12.2017 - it is at the discretion of the municipalities to mitigate this in a socially acceptable manner through equitable measures, such as payment in installments, annuity, deferral or remission. The person liable to pay the contribution can submit an application to their local authority.

In Art. 19a KAG, the Free State of Bavaria established a hardship fund with a one-off amount of €50 million to proportionately compensate for certain hardships caused by road improvement contributions levied in the period from January 1, 2014 to December 31, 2017. An independent commission, which is not bound by technical instructions, decided on the granting of benefits. An application for hardship compensation could only be submitted until December 31, 2019.