|Christoph Besch||Alexander Lehnen|
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.
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