State ministers draft share deal law

30/11/2018

Germany’s state finance ministers yesterday passed legislative proposals on the future taxation of share deals. These proposals will now be introduced into the federal legislative process by the German Federal Ministry of Finance. The content of the resolution essentially corresponds to what had previously been announced: the legal situation, according to which land transfer tax applies to shareholder changes in landowning partnerships involving at least 95% of the shares, shall be extended to shareholder changes in landowning corporations, and the rate shall be lowered to 90%. Existing shareholders must therefore remain involved to a significant extent. The deadlines in the Real Estate Transfer Tax Act shall be extended from five to ten years. The law firm Arnecke Sibeth Dabelstein expects that the Federal Ministry of Finance will introduce its own ideas: “The worst case would be the Dutch model, with taxes applying when a shareholder change involves more than 50% of shares.” The German Property Federation (ZIA) warns of the consequences of tightening the laws. Share deals are used to prevent multiple taxation of properties; removing this option would raise the cost of residential, work and production space. It would also be necessary to immediately clarify transitional arrangements in order to ensure legal certainty for transactions.


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