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

Germany: Retroactive changes to RETT rules to apply from 2009



Alexander Linn

Thorsten Braun

On July 17 2015, Germany's Constitutional Court made public a decision, dated June 23, in which the court held that the 'secondary tax base' or 'special tax value' used in the calculation of the value of real property for German real estate transfer tax (RETT) purposes is unconstitutional. The secondary tax base is used as an alternative method of calculating the value of real property in cases where real property is not purchased directly, such as the direct or indirect transfer of shares in real estate holding entities, mergers, and so on. The secondary tax base generally results in values that are far lower than the fair market value of the real property, in many cases only reflecting 50% or less of the fair value of the property. The secondary tax base is calculated based on the actual annual rent or an alternative customary rent combined with certain multipliers and adjustments or, if rent is not available, on tax book values for land and buildings with relevant adjustments.

The court held that the calculation of RETT based on the secondary tax base violates the equality principle in article 3 of the German constitution because it deviates significantly and unintentionally from the market value of the real property. The court decided that the current version of the law cannot apply as from January 1 2009, and that parliament has until June 30 2016 to enact a new law that applies retroactively from January 1 2009.

The change in the law is expected to result in an increased RETT base closer to the fair market value used in direct purchases and, therefore, to an increased RETT in future transactions. Further, due to the retroactive effect of the decision, the new law could apply in cases where the RETT-triggering event already has occurred but the RETT base has not been finally assessed or where the RETT- triggering event has not been indicated or detected.

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 European Parliament raises concerns over unanimity in voting on pillar two, while protests break out over tax reform in Colombia.
Ramesh Khaitan speaks to reporter Siqalane Taho about tax morality, transfer pricing regulations, Indian tax developments, and the OECD’s two-pillar solution.
Join ITR and KPMG China at 10am BST on October 19 as they discuss the personal, employment, and corporate tax-related implications of employees working from overseas.
Tricentis and Boehringer Ingelheim, along with a European Commission TP specialist, criticised the complexity of pillar one rules and their scope at an ITR event.
Speakers at ITR’s Managing Tax Disputes Summit said taxpayers can still face lengthy TP audits, despite strong documentation preparation
Gig economy companies in New Zealand will need to fully account and become liable for the goods and services tax of underlying suppliers on their platforms, under new proposals.
Join ITR and Thomson Reuters at 2pm (UAE) / 11am (UK) on October 13 as they discuss how businesses can prepare for Tax Administration 3.0 and future-proof against changes such as e-invoicing and increasing digitisation.
ITR has partnered with global TP leaders from Deloitte to discuss transfer pricing controversy around the globe, and to share advice on how to navigate an increasingly uncertain and risky TP landscape.
Sources say they are not satisfied with pillar one protections in the marketing and distribution safe harbour, even though it was designed to give businesses greater tax certainty.
Political support for qualified majority voting is at a peak as unanimity rules continue to block the European Council from passing a directive on pillar two.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree