All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

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


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 ( and Thorsten Braun (


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


more across site & bottom lb ros

More from across our site

The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.
Tax consultants say companies must not ignore financial transactions in their TP policies as authorities, particularly in the UK, become more demanding.