Tax & Legal

PwC updated its publication Real Estate Going Global - Worldwide country summaries, that provides you with a summary of tax and legal aspects of real estate investments from 50 territories around the globe.

On 31 July 2019, the Federal Cabinet adopted the government draft of the "Real Estate Transfer Tax Amendment Act".

Certain Federal States have granted a filing extension for the filing of declarations for the determination of the value of real estate for real estate tax purposes.

The Supreme Tax Court has granted a taxpayer’s appeal against a real estate transfer tax assessment on the grounds that an indirect change in the shareholdings in the members of a real estate partnership was less than a complete change of interest in the partnership. With its decision the court has confirmed its case law regarding share transactions made prior to the enactment of the Tax Amendment Act 2015.

The Supreme Tax Court has asked the Constitutional Court for a ruling on the conformity with the constitution of the real estate transfer tax valuation provisions applicable to share transfers.

On 07 May 2021, the Bundesrat approved the law amending the Real Estate Transfer Tax Act.

The Supreme Tax Court decided that the transfer of real estate from a community of heirs to a partnership in the context of the division of the estate is exempt from real estate transfer tax up to the share in which a co-heir participates in the acquiring partnership. The tax exemption does not apply if the co-heir's share in the partnership decreases within five years following the transfer.

On 10 April 2018, the German Constitutional Court pronounced as unconstitutional the provisions on the valuation of property for the purposes of real estate tax and demanded new regulations

When purchasing a property for which the buyer and seller have agreed to split the real estate transfer tax equally the tax office requires a verifiable justification when claiming the full amount from the buyer. In its decision the Supreme Tax Court also discussed the question as to whether and when an so called “single (uniform) chargeable transfer” may be assumed.

The tax exemption from real estate transfer tax (RETT) in the event of restructuring within a group under Section 6a of the Real Estate Transfer Tax Act (RETTA) does not constitute State Aid prohibited by EU law.

The Supreme Tax Court has held that real estate transfer tax is to be levied separately on each transaction in a series even if the transactions are interrelated, serving a single common object.

If a new church parish is established by merging several church parishes, real estate transfer tax is payable if the original parishes held shares in real estate-owning GmbHs and these GmbH shares are all in the hands of the newly established church parish after the merger. The Supreme Tax Court decided that this also applies if those GmbHs operate charitable institutions such as hospitals or retirement homes.

Profits arising from the sale of an interest in a partnership are not to be included in the extended trade tax deduction for real estate enterprises.

The Supreme Tax Court has again held that the real estate transfer tax due on a contribution of a shareholding in another company is to be written off as a current operating expense.

In a recently published decision, the Supreme Tax Court commented on the repurchase of shares in a property-owning company where the previous acquisition was not subject to real estate transfer tax. Another case decided on the same date concerned the annulment of a chargeable transfer (concentration of 100% of the shares in the property-owning company) which later was reversed a second time restoring the initial level of shareholding.

The Supreme Tax Court has accepted the sale of mining rights attaching to a property no longer owned by the seller as the sale of a real estate right to be taxed as a capital gain.

The Constitutional Court has held the set calculation of the value of the land held by a company when assessing the transfer of the company’s shares to real estate transfer tax to be unconstitutional. The government has been given until June 30, 2016 to enact a different formula, to be applied retroactively to January 1, 2009.

In a most recently published decision, the Supreme Tax Court held that real estate transfer tax falls due on the acquisition by a company of its own shares if this led to a holding of a little over 95% (90%) of the issued share capital in the hands of one of the shareholders.

Following the discussions of the Conference of Finance Ministers of the Federal States, the government has included in the Finance Bill 2019 amended regulations in respect of so-called “share deals” in real estate transactions. Aim of the proposed rules is a tightening of the financial framework around the indirect "transfers" of real estate held through companies and other associations of persons.

On 30 May 2017 the Supreme Tax Court decided to refer to the European Court of Justice (ECJ) the question of whether the real estate transfer tax (RETT) exemption on conversions - in Section 6a Real Estate Transfer Tax Act - constitutes illegal state aid.