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2013 Change in Real Estate Transfer Tax Law in Germany

The transfer of property is subject to German Real Estate Transfer Tax.
Hereby the hight of the transfer tax is between 3,5% and 5% (Berlin) depending on the federal state.

To avoid German real estate transfer tax it was practice to sell shares of a company owning the property (so called share-deal) instead of selling the property it self (so called asset-deal).

Now Germany put a new law (effective on June 7, 2013) to prevent this miss-use and make the German federal tax law more fair.

Here is how the so called RETT-Blockers (RETT stands for Real Estate Transfer Tax) used to work:

Not the property would be transferred but 94% and 6% shares of a company owning the property.

The transfer of shares in real estate-owning companies is in general subject to German Real Estate Transfer Tax if at least 95% of the shares in the company are accumulated or at least 95% of the shares are transferred to new shareholders.

To circumvent this it was use to transfer only 94% of the shares to the new owner and the rest of 6% either stayed with the old owner or were transfer to another entity not equal to the 94% shareholder. However the 6% entity could be owned by the 94% company trough a holding structure.

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