• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 10/2/2013

Germany - Changes addressing real estate transfer tax “blocker structures” 

October 2: Rules effective for ownership transfers after 6 June 2013 prevent taxpayers from seeking benefit from German real estate transfer tax “blocker structures” by implementing a substance-over-form approach to determine the relevant ownership percentage.

Under German law, the transfer of shares in real estate owning companies generally are subject to Germany’s real estate transfer tax if at least 95% of the shares in the company are combined or at least 95% of the shares are transferred to a new shareholder.

Previously, German real estate transfer tax was not owed when a partnership held more than 5% of the shares in the real estate-owning subsidiary and another party held a minority interest in the partnership.

However, the German law provisions were amended, and ownership is now determined by using the economic ownership percentage in the German subsidiary (rather than the more formal attribution of shares under the old rules). As a consequence, the acquisition of shares in a German subsidiary by a foreing parent company now can be subject to German real estate transfer tax.

Read an October 2013 report [PDF 164 KB] prepared by KPMG LLP: German Real Estate Transfer Tax (RETT): Discussion of Recent Law Changes and new Case Law

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