Tax & Legal

Tax & Legal

Tax exemption for group restructurings under Section 6a Real Estate Transfer Act: Supreme Tax Court applies a broad interpretation.

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. It can also apply to cases where a dependent company is merged with a controlling company. This was decided by the Supreme Tax Court in its ruling of 22 August 2019 – II R 18/19, published on 13 February 2020.  Continue reading

Finance Bill 2019: proposed changes to the real estate transfer tax regulations in the case of so-called shares deals

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. The draft bill includes the following amendments: Continue reading

Real Estate Transfer Tax Act: changes planned to the treatment of “share deals”

The Federal Ministry of Finance is planning to introduce a bill based on the proposals made by the Finance Ministers’ Conference in November 2018 in relation to the Real Estate Transfer Act (RETT Act). It is currently envisaged that the changes, which are likely to be discussed in the Cabinet at the end of April 2019, should be included in the Finance Act 2019. Continue reading

RETT-Blocker: Indirect unification of shares through an intermediary partnership

The Supreme Tax Court has decided that where an intermediary partnership holds direct or indirect interests in a real-estate-owning company, the relevant holding for establishing its interest in the related real-estate holding company, is its interest in the capital of the partnership and not the interest in the jointly owned property according to the law of property. Continue reading

Capital transfer tax not precluded by Sixth Directive

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.