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BFH rules on RETT on share deals

Global Tax Update:October 2016/Germany

Germany's Federal Tax Court (BFH) rules Real Estate Transfer Tax (RETT) should be triggered only at the time an SPA is signed, not where contractual rights are assigned in a share deal. (Global Tax Update:October 2016/Germany)

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Germany’s Federal Tax Court (BFH) issued a decision on May 12, 2016, ruling that neither the assignment of rights under an agreement to purchase the shares of a company that owns real estate nor the transfer of the shares to a designated assignee at closing triggers a Real Estate Transfer Tax (RETT) liability. The BFH reversed the decision of the lower court of Cologne.

Under German law, RETT may be triggered where 95% or more of the shares in a German real estate-owning company are directly or indirectly transferred to a new acquirer or where 95% or more of such shares are combined for the first time in the hands of a single shareholder. RETT is triggered upon the signing of the share purchase agreement (SPA) and not upon the transfer in rem to the purchaser at closing.

 

>> Click for Japanese [株式譲渡時における不動産移転税の課されるタイミングに係る判決]

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