Germany: German Ministry of Finance set to join case on RETT intra-group exception

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

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

Germany: German Ministry of Finance set to join case on RETT intra-group exception

Linn-Alexander
braun.jpg

Alexander Linn

Thorsten Braun

Germany's Federal Tax Court (BFH) has asked the German Ministry of Finance to join a pending case on the intra-group exception to the German real estate transfer tax (RETT) (case ref. II R 62/14). One of the issues raised by the BFH relates to the question of whether or not the intra-group exception has been notified to the European Commission as potential state aid.

Under the RETT intra-group exception, certain direct or indirect transfers of real estate are exempt from tax. One condition for that exception to apply is that the transaction involves one controlling company and one or more controlled entities, requiring a direct or indirect shareholding of at least 95% to exist for five years before and after the transaction. If interpreted literally, this criterion cannot be met where the transaction involves a merger (where the controlled entity disappears) or a demerger (where the controlled entity is created) because the 95% shareholding would either not survive the transaction or would not exist prior to the transaction. Due to the complexity of the rule and the inconsistency of the current administrative guidance, the BFH has asked the Ministry of Finance to join the case and to provide its view on the rule.

Also worth noting is that the BFH has raised the issue that this intra-group exception might constitute state aid according to article 107 TFEU. The BFH has asked the Ministry of Finance to confirm if the rule has been notified as potential state aid or not. This issue, which has not been discussed in German literature, shows the increased importance of state aid in the area of direct taxation, which extends far beyond the current discussion on ruling practices.

Alexander Linn (allinn@deloitte.de) and Thorsten Braun (tbraun@deloitte.de)

Deloitte

Tel: +49 89 29036 8558 and +49 69 75695 6444

Website: www.deloitte.de

more across site & shared bottom lb ros

More from across our site

Belgium’s new coalition government has gone ahead with a new exit tax regime that could land it in the courts.
Brazil’s government has not officially framed the bill as a countermeasure amid trade tensions with the US, but the move is being considered as part of Brazil’s strategic response, one expert tells ITR
Understanding India’s income tax landscape can help charities ensure compliance, optimise tax benefits, and enhance their impact, writes Raghav Bajaj of Khaitan & Co
Tax advisers in Brazil are rising above the country’s notoriously complex tax system to deliver high-quality advisory services, ITR’s exclusive in-house data reveals
ITR’s data has highlighted the US firm’s ambition to become America’s ‘premier’ tax player via a concerted partner recruitment strategy
Jaap Zwaan’s arrival continues a recent streak of A&M Tax investing in the region; in other news, the US and Japan struck a deal that significantly lowered tariff rates
In a world where international tax concepts rely on human activity, Leonard Wagenaar poses existential questions about the future of such ideas when AI is ever-present
France v Axa provides a practical illustration of how the burden of proof is applied in TP matters under French law, ITR also heard
In an exclusive interview with ITR, Ian Gary calls for a central public CbCR database and bemoans the US’s lack of involvement in international tax transparency
Reckitt Benckiser is to divest its Essential Home business, which includes more than 70 brands, to private equity firm Advent International
Gift this article