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Reform of the real estate transfer tax comes into effect from 1.7.2021


On 14.4.2021, after lengthy political discussions and a long phase of legal uncertainty, the Finance Committee of the German Bundestag agreed on a reform of the real estate transfer tax. The reform comes into force on 1.7.2021.


A tightening of the real estate transfer tax law has been planned for several years. The aim is to make so-called share deals more difficult. By means of such share deals - i.e. the acquisition of shares in companies holding real property - it was possible to avoid land transfer tax under certain conditions in the past. The law was expected to be passed already in 2019. However, the governing coalition was ultimately unable to agree on individual details of the reform. It was not until April 2021 that this agreement was reached in the Finance Committee of the German Bundestag. The reform is now expected to come into force on 1.7.2021.

The most important changes at a glance

The planned changes mainly correspond to the draft law from 2019:

  • The rates at which the acquisition of shares in a real estate company triggers real estate transfer tax are lowered from 95 to 90 %. This affects all facts for companies holding real estate (change in the number of partners in partnerships, unification of shares in partnerships and corporations in one hand).
  • In contrast, the minimum shareholding ratio for the application of the group clause will not be lowered (still 95%).
  • A new provision is introduced for changes in the shareholder structure of corporations. It corresponds to that already existing for partnerships. According to this, a transaction is subject to real estate transfer tax if at least 90 % of the shares in the company are transferred to new shareholders within ten years. The previously frequently practised acquisition with the participation of a co-investor (with at least 5.1 %) is now also ruled out for corporations.
  • The periods under review for the aforementioned facts are extended from five to ten years.
  • Also the pre- or post-retention periods in the exemption regulations for the transfer of real estate to or from partnerships are extended accordingly. For a case that has been common in practice up to now, in which a share in a real estate-owning partnership (acquired without incurring real estate transfer tax) shall be increased in a tax-optimised manner, the holding period is even extended to 15 years.
  • Again, the group clause is not affected: in this case it remains at five years (however, already before and after the legal transaction, as far as possible under conversion law).
  • New - also in comparison to the previous draft law - is the introduction of a stock exchange clause. In the case of listed companies, real estate transfer tax shall not be triggered because 90 % of the shares have been transferred to "new shareholders".

Entry into force

The new regulation shall enter into force on 1.7.2021. In addition, the previous thresholds will continue to apply, i.e. it will not be possible to increase a shareholding of 94.9 % (i.e. above the new threshold) acquired without real estate transfer tax to 100 % in a tax-optimised manner. For the new provision on changes in the shareholder structure of corporations (Sec. 1 para. 2b of the German Real Estate Transfer Tax Act - GrEStG), share transfers prior to 1.7.2021 are not taken into account. However, the shares must also have been transferred in rem before this deadline. In the case of partnerships (Sec. 1 para. 2a of the German Real Estate Transfer Tax Act - GrEStG), the extension to ten years does not lead to a "revival" of a five-year period that has already expired. Anyone who has already held an interest for more than five years retains this status as an existing shareholder. The same applies to the exemption provisions for partnerships (Secs. 5, 6 of the German Real Estate Transfer Tax Act -GrEStG): If the five-year retention period has already expired on 1.7.2021, it will not be extended. However, periods that have not yet fully expired are extended to 10 or 15 years.

Practical advice

After the lengthy negotiations that preceded the decision of the Finance Committee, it can be assumed that the amendments will now be adopted by the German Bundestag and Bundesrat as they are. The remaining time until 1.7.2021 may still be used for transactions under the old law (e.g. acquisition with the participation of a co-investor).