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

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: 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

The plan aims to improve the efficiency, transparency, and effectiveness of direct tax administration in India
Meanwhile, South Africa’s finance minister has accepted a court decision on suspending a VAT increase and US President Donald Trump mulls a 100% tariff on foreign films
Jaime Carey speaks about the benefits of his tax background, DEI values, the use of AI for a smarter legal practice, and other priorities that will define his presidency
Historically low levels of attrition over consecutive years made a ‘difficult decision’ necessary, PwC has reportedly said
WTS Global is also vetting new potential member firms in Algeria, Cote D’Ivoire and Benin, Kelly Mgbor tells ITR in an exclusive interview
The scope of qualifying pillar two tax credits could reportedly be broadened; in other news, hundreds of IRS appeals staff are to resign
For many taxpayers, the prospect of long-term certainty that a bilateral APA offers can override concerns about time, cost and confidentiality
Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
JBS, the biggest meat company in the world, allegedly used Luxembourgian ‘mailbox companies’ to avoid taxes between 2019 and 2022
Gift this article