New Real Estate Transfer Tax (RETT) Rules for Share Deals in Germany

Michael Schindlbauer, Legal Counsel, Eyemaxx Real Estate AG, Germany

In Germany, real estate transfer tax (“RETT”) has to be paid in different percentages, depending on the respective federal state. This applies not only to asset deals but also to share deals, when the buyer takes over more than 95 percent of the shares in a (property holding) company. To prevent RETT, solutions have been developed to circumvent the tax. Such solutions ensure that not all shares in a (property holding) company are sold, but e.g. only 94 percent. In case of a (property holding) corporation the remaining 6 percent can be bought by another non-related (business partner) company or remain with the seller. Further on, in case of a (property holding) partnership, the respective shares can be held for at least five years. After the five-year period has expired, the investor holding 94 percent of the shares may also take over the remaining six percent. In that case, RETT only has to be paid for the remaining 6 percent share while the previous 94 percent remain free of the tax. In order to prevent such constructions to circumvent RETT, the German government wanted to introduce changes to the 95 percent limit as well as to the five-year period mentioned above starting with January 1, 2020. Due to massive criticism and in particular in respect to the concerns raised during the public hearing in the Bundestag on October 14, 2019, the German government has decided to reconsider the proposed changes in the German RETT-law to reform the taxation of real estate share deals.

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Germany Finance Banking & Finance June 2020 Vol.13, No. 51, Spring 2020

Michael Schindlbauer

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Michael Schindlbauer holds a degree of Magister iuris from the University of Vienna, Austria, a postgraduate degree of Master of Laws in European and International Business Law (LL.M.) from the University of Vienna, Austria and a postgraduate degree of Master of Laws in United States Law with specialization in International and Comparative Law (LL.M.) from Santa Clara University, United States of America. He has been practicing law professionally since 2012. After graduating from the University of Vienna, Michael Schindlbauer during his court practice was admitted to the Vienna Higher Regional Court as a district attorney and subsequently worked for an export credit insurance company before switching to the real estate business.

Eyemaxx Real Estate AG

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The Eyemaxx Real Estate Group is a real estate company which has been operating on the market for more than 20 years with a long-standing, successful track record. The Eyemaxx Real Estate Group focuses on the development of projects in the following segments: residential properties, micro and student apartments, hotels and serviced apartments, urban quarters as well as retail and logistics. The Eyemaxx Real Estate Group holds selected real properties in its portfolio. The core markets of the Eyemaxx Real Estate Group are Germany and Austria.

Germany Finance Banking & Finance June 2020 Vol.13, No. 51, Spring 2020
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