This publication gives investors and fund managers an overview of year-end to-dos and important issues in real estate taxation in 37 tax systems worldwide. Furthermore, it highlights what needs to be considered in international tax planning and the structuring of real estate investments. Continue reading
Tax & Legal
The coalition factions’ bill on the reform of the land taxes and valuation laws (Land Tax Reform Act), which was passed by the Bundestag on 18 October 2019 and approved by the Bundesrat on 8 November 2019 was published in the Federal Gazette on 2 December 2019 as the Act on the Reform of the Land Taxes and Valuation Laws
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. Continue reading
The ECJ has held that a Spanish transfer tax on the purchase of shares in a property-owning company is not similar to VAT and is therefore not precluded by the tax duplication prohibition of the Sixth Directive.
Transfers of shares in Spanish companies holding at least 50% of their assets in real estate are subject to a capital transfer tax if the transfer allows the acquirer effective control over the property. Transactions subject to this tax are specifically exempt from VAT under the VAT Act. A Spanish pension fund acquired 64% of the shares in a property company, bringing its total holding to 67%. It protested against its assessment to capital transfer tax on the grounds that the tax was, effectively, a substitute for VAT and thus precluded by the provisions of the Sixth (and now the VAT) Directive. However, the ECJ has rejected this claim, holding that the capital transfer tax is not similar to VAT and not therefore precluded by the Sixth Directive.
The ECJ case reference is C-139/12 Caixa d’Estalvis i Pensions de Barcelona, judgment of March 20, 2014.
Note: the corresponding German tax, real estate transfer tax (RETT), is levied on share transfers in any company owning German real estate that lead to the acquistion of an interest of at least 95%. The two taxes are not identical, although the arguments of the ECJ in support of the Spanish tax also hold good for the German levy.