Germany: Real estate transfer tax blocker stopped

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: 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

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
In the first of a new series of weekly opinion pieces, ITR Editor Tom Baker reflects on the OECD’s attempts to sanitise the US’s brazen pillar two negotiations
The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
Gift this article