Taxes - The One-Pager - Germany

When acquiring shares in entities owning real estate, there is a regular risk of double assessment of real estate transfer tax (RETT) if a complete real estate transfer tax notice has not been submitted to the relevant tax office within the deadline at both the signing and closing stages. This cumbersome situation in practice will be rectified with the entry into force of the Ninth Act Amending the Tax Consultancy Act and Further Tax Legislation.

What is the issue?

• Upon the conclusion of a contract (signing), whereby the purchaser directly or indirectly acquires at least 90% of the interest / shares in a (capital or partnership) entity with domestic real estate or increases their ownership to at least 90% (share consolidation), RETT is triggered and is payable by the purchaser.
• The completion of this transfer (closing) triggers RETT once again. The tax liability rests with the property-owning company.
• The RETT assessed against the purchaser at signing is waived upon application, provided that a complete RETT notice was submitted to the relevant tax office in good time at both signing and closing.

Legislative amendment

• With the entry into force of the legislative amendment, RETT will only be levied at signing. There will be no additional RETT at closing.
• From now on, the entity that holds the German property must also submit a notification at Signing.
• The notification period is extended to one month (previously only two weeks for tax-payers resident in Germany).
• In future, RETT will be jointly and severally liable to the purchaser and the property-owning company.

Implications for transaction practice

• The signing / closing issue no longer applies.
• Incomplete or late real estate transfer tax notices do not result in double taxation with RETT.
• Due to joint and several liability, contractual clauses should be considered to regulate the economic allocation of RETT (e.g., provisions / liabilities for RETT or (subsequent) acquisition costs) between the parties involved.
• Provided that the purchaser holds less than 90% of the interest / shares in the property entity following the acquisition, RETT may – as before – be triggered at closing if, within 10 years, a total of at least 90% of the interest / shares are transferred to new owners (including the interest / shares transferred at closing).
• In the case of public takeover bids and other stock market acquisitions, there remains a risk of double RETT. In the case of combined small stock market and large off-market share acquisitions, a consolidation of shares takes place as soon as the 90% threshold is reached for a purchaser through combined stock market and off-market acquisitions. In the event of further acquisitions (e.g., to reach the 95% squeeze-out threshold), a notional new 90% threshold for Section 1(2b) of the Real Estate Transfer Tax Act (GrEStG) may be exceeded. This is because stock market acquisitions are not counted for the purposes of Section 1(2b) and (2c) of the GrEStG; a parallel consolidation of shares can no longer take place and the property continues to be attributed to the entity.

Application

The Bundestag has passed the bill on 11 June and the Bundesrat on 12 June 2026. The new law was published on 2 July 2026. The new regulations will apply to all acquisitions completed on the day following the date of promulgation, i.e., from 3 July 2026. If the signing takes place before and the closing after the date of promulgation, the new regulations will also apply.