|Hartwig Welbers, PwC|
The Supreme Tax Court in its judgment II R 17/10 of April 24 2013 published on June 19 2013 has now rejected the tax office's contention. Rather, only 94% of the partnership interest had changed hands (the first transaction) and the 6% holding remained unaffected. Direct changes of ownership were a matter of legal form, while indirect changes could only be seen as a matter of business substance. In that respect only a sale of all the shares in an interposed corporation to a new ultimate shareholder enabled him to dispose over the partnership share without reference to the other investor. The 50% sale at issue did not and was not therefore the equivalent of a transfer of a 3% share in the partnership.
Whether this judgment applies to indirect changes in shareholdings in a property-owning corporation is not entirely clear, although such a conclusion would seem logical.
The tax authorities are rumoured to be considering a decree instructing tax offices not to follow this court decision as a precedent in other cases.
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