Keywords: real estate transfer tax, RETT-Blocker, Administrative Cooperation Directive Implementation Act, Annual Tax Act 2013,
An agreement proposal of the conciliation committee (Vermittlungsausschuss), adopted on June 5, 2013, for the Law Implementing the Administrative Cooperation Directive and to Change Tax Provisions (Administrative Cooperation Directive Implementation Act - "AmtshilfeRLUmsG") received the consent of the German Federal Parliament (Bundestag) on June 6, 2013 and of the German Federal Council (Bundesrat) on June 7, 2013. This AmtshilfeRLUmsG now finally also includes the long-planned legal change to the real estate transfer tax law in order to prevent so-called "RETT-Blocker" structures. The wording that had already been drafted during the deliberations for the (failed) Annual Tax Act 2013 was used without changes. In return to this tightening of the law, the possibilities for real estate transfer tax neutral intra-group restructurings pursuant to Section 6a GrEStG were extended. The real estate transfer tax rules come into effect on the day after the law is promulgated, i.e. already on the day after the Federal Parliament's resolution and accordingly for acquisitions realized from June 7, 2013.
"Old" Rett-Blocker Structure
Under the old legal situation, only the direct change of the legal owner of domestic real properties (Section 1 paragraph 1 and 2 GrEStG) and the transfer of interest in partnerships and corporations holding real properties (Section 1 paragraph 2a and 3 GrEStG) constituted an event, which is generally subject to real estate transfer tax.
For cases where interests in partnerships and corporations are combined in accordance with Section 1 paragraph 2a and 3 GrEStG, the evaluation under the old rule was exclusively based on civil law, where the joint right of the (direct or indirect) shareholders/ partners to the company's assets was decisive. The evaluation had so far not been based on an economic perspective.
Under these rules, the following structure was regularly implemented in order to avoid real estate transfer tax from accruing in the case of a (partial) change of shareholders/partners (so-called "RETT-Blocker" structure). In the case of such a RETT-Blocker structure, an Investor acquired up to 94.9 percent of the shares in a corporation holding the domestic real estate (Immobilien GmbH). The remaining shares were held by a partnership (Co-Invest KG). In the partnership, the Investor again held...