27 May 2019
Section 1 para 2a of the German Real Estate Transfer Tax Act Draft (referred to hereinafter as “GrEStG-D”) includes now direct and indirect changes of partners in a partnership, owning domestic real estate, in the amount of 90% (before 95%) within a period of 10 years (before 5 years). This section simulates the transfer of the domestic real estate from the partnership in its old partner structure to the partnership in its new partner structure. In the course of the amendment, the structure of this section has not changed substantially. According to the legislative justification, the reduction of the participation quota from 95% to 90% as well as the extension of the time limit from 5 to 10 years shall narrow the structuring possibilities and therewith restrict abusive avoidance of taxation. The transitional provisions to this section are complex. Pursuant to section 23 para 17 GrEStG-D the new section 1 para 2a GrEStG-D shall firstly be applicable to acquisitions, which will be realised after 31st of December 2019 through changes of partners in a partnership. All acquisitions realised before 1st of January 2020 shall not be covered. A change of partners is triggering the preconditions of this section when the transaction in rem has taken place.
Pursuant to section 23 para 18 GrEStG-D section 1 para 2a GrEStG-D shall not count in such changes of partners from 1st of January 2020 onwards, which shall not qualify as “new partners” at the end of 31st of December 2019 pursuant to 1 para 2a GrEStG, currently in force. Therefore, such changes of partners shall not count, which took place more than 5 years ago, and where according to the old provision due to the expiration of 5 years the respective partner can qualify as an “old partner”. An “old partner” does not turn into a “new partner” in course of the extension of the time limit.
To the pdf-version: Summary of the substantial changes of the German Real Estate Transfer Tax Act
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