Germany: Real estate transfer tax blocker stopped

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Germany: Real estate transfer tax blocker stopped

besch.jpg

lehnen.jpg

Christoph Besch


Alexander Lehnen

Property conveyances are subject to a stamp duty (real estate transfer tax – RETT) of between 3.5% and 5.5% of the consideration. Substitute transactions are also subject to this tax, including share transfers leading to the accumulation of 95% or more of a property owning company's shares in a single hand. A similar rule applies to partnerships, though up to now there was no rule linking the two. This led to an avoidance mechanism, known as the RETT blocker. Provided the acquirer of a company was prepared to accept at least a very minor degree of minority interest in his company, he could purchase 94.9% through a wholly-owned company and the remaining 5.1% through a partnership in which he held a 94.9% interest.

No RETT was due as neither of the 95% thresholds were met. However, his effective ownership in the company owning the property amounted – in this example – to 99.7% (94.9% + 94.9%×5.1%).

On June 7, the Bundesrat put an end to this avoidance scheme with a provision in an omnibus tax amendment act combining the two thresholds into one overall effective ownership level. An effective transfer of 99.7% of the shares will thus trigger RETT no matter how it is split between vehicles. However, possibilities for relieving the RETT burden still exist, so intending investors still need to carefully consider alternative structures.

On the other hand, though, there is a compensation for those seeking to reorganise a group structure. The existing – though limited – exemption for transfers of shares within a group with no change in ultimate ownership has been extended to transfers of the property itself, provided there is no consideration other than shareholder's rights. There is now one less barrier to corporate reorganisations within Germany.

Christoph Besch (christoph.besch@de.pwc.com)

Tel: +49 40 6378 1377
Alexander Lehnen (alexander.lehnen@de.pwc.com)

Tel: +49 40 6378 2136

PwC

Website: www.pwc.de

more across site & shared bottom lb ros

More from across our site

The case to determine whether the tariff regime is constitutional will eventually find its way to the US Supreme Court, ITR has also heard
In other news, the Council of the EU pledged support to a CBAM simplification and exemption initiative, and Portugal issued new VAT filing guidance
While Brazil’s sweeping tax updates are a triumph for modernisation, Giuliano Gioia of Sovos warns that MNEs with a Brazilian footprint should be prepared for a short and sharp adjustment
Matthew Sharp, leader of London’s newest tax disputes team, shares the trials and tribulations of starting from scratch
Brazil appears to be adopting protocols to align national taxation with international standards, but recent changes are not immune from criticism, experts tell ITR
The US president did not have the authority to impose the tariffs, a court ruled; in other news, Fried Frank and Crowe Ireland made key tax hires
Pillar two considerations have become a fact of life for taxpayers everywhere, not least in Switzerland, where companies nonetheless continue to be active with investment
The Dutch TP software company’s co-founder tells ITR about speeding up documentation processes, following in Steve Jobs’s footsteps, and what makes tax cool
The ruling underscores the need for companies to provide robust and defensible valuations of intangible assets, one partner tells ITR
Pillar two is certain to be a game-changer for tax advisers and their clients. Russell Gammon of Tax Systems outlines 10 reasons why
Gift this article