Changes to real estate transfer tax


On May 8, 2019, the Federal Ministry of Finance published its draft bill on the 2019 Annual Tax Act (official name: “Act on the Further Tax Promotion of Electric Mobility and on the Amendment of Further Tax Regulations”).

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In addition to amendments, above all to trade tax, value-added tax, and the promotion of electromobility, the draft contains provisions on the expected tightening of taxation of share deals, i.e., the transfer of shares in real estate-owning companies. The main amendments are as follows:

  • the threshold for the change of ownership in partnerships will be reduced from 95% to 90%, with the relevant period for the change of ownership being extended from 5 years to 10 years (Section 1(2a) Real Estate Transfer Tax Act).
  • Under the same conditions, a new provision will now be introduced for the change of shareholders in corporations (Section 1(2b) Real Estate Transfer Tax Act). Irrespective of the legal form, a maximum of 89.9% of the shares may be transferred within ten years to avoid real estate transfer tax in the future.
  • With respect to preferential provisions for the transfer of real estate to and from joint ownership (Sections 5, 6 Real Estate Transfer Tax Act), the retention periods will also be extended from 5 to 10 years (in individual cases even to 15 years).

The new provisions are set to apply to acquisition transactions after December 31, 2019. The associations now have until the end of May 2019 to comment on the draft bill. In addition, see our report on real estate transfer tax reform in the following article from 29.03.2019: Click here

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