The latest on real estate transfer tax (share deals) and property tax

Dear Sirs,

A high ranking member of the Ministry of Finance provided the following outlook at a ZIA event last Thursday:

• The Ministry of Finance plans to adopt the proposal  made by the Finance Minister Conference on 29 November 2018 regarding the reform of the real estate transfer tax and to introduce it into the legislative process.
• The provisions shall be included into the Annual-Tax Act 2019.
• It is currently expected that the Annual-Tax-Act 2019 will be addressed by the cabinet by the end of April; the commencement of the parliamentary process is planned for the beginning  of May.

According to the proposal submitted by the Länder (German federal states) no far reaching so called Grandfathering Rules are intended and the protection of a legitimate expectation may no longer apply.

We strongly recommend to liaise with us in respect of all transactions or similar measures or arrangements which include a transfer of shares (in partnerships or corporate entities) only as from May 2019 as they may no longer be subject to the hitherto  applicable law on  real estate transfer tax.

With regard to property tax the Ministry of Finance will draft a bill on the basis of a key issue paper which transpired on 1 February to be slightly adjusted on 14 March. The bill will be debated in the cabinet on 17 April.

Best regards

Alexander Lehnen