German Federal Fiscal Court Questions Practice of Imposing Double Real Estate Transfer Tax on Share Deals

In proceedings to suspend enforcement, the German Federal Fiscal Court has expressed serious doubts about the administrative practice of imposing double real estate transfer tax in share deals. In particular, the court believes that the current administrative view that failure to comply with the formal notification deadlines leads to double taxation is not lawful. Nevertheless, taxpayers should continue to notify the competent tax office of both the signing and closing of share deals within the specified deadlines.

In the underlying case (see decision dated July 9, 2025, Ref. II B 13/25 (AdV)), the applicant concluded a notarized share purchase agreement (Signing) for the acquisition of all shares in a real estate holding corporation company (a so-called Share Deal). A real estate transfer tax (RETT) notification to the tax office was filed by the certifying notary after the expiry of the statutory two-week deadline; no RETT notification of the transfer of ownership (Closing) was made.

The tax office then assessed RETT with regard to the conclusion of the share purchase agreement (Section 1 (3) No. 3 Real Estate Transfer Tax Act (Grunderwerbsteuergesetz - GrEStG) and with regard to the transfer of ownership of the shares (Section 1 (2b) GrEStG). The applicant was of the opinion that RETT should only be assessed once—with regard to the transfer of ownership of the shares in rem (Closing). The applicant filed an appeal and in addition applied for suspension of enforcement (Aussetzung der Vollziehung - AdV).

BACKGROUND AND LEGAL ISSUES

The legal issue concerns the temporal interaction and hierarchical relationship between two RETT-related events in connection with Share Deals:

• Certain transfers of at least 90% of the shares in a real estate-owning corporation within 10 years are subject to RETT (Section 1 (2b) GrEStG). The relevant taxable event here is the transfer of the shares in rem (Closing).
• A legal transaction (in this case: conclusion of a share purchase agreement/Signing) that grants the right to claim for the transfer of at least 90% of the shares in a real estate-owning company is also subject to RETT (Section 1 (3) No. 3 GrEStG). The taxable event in this case is the conclusion of the agreement (Signing). However, according to the wording of the law, this rule only applies "insofar as taxation under [paragraph] 2b does not come into consideration (kommt nicht in Betracht)."

In connection with Share Deals, these rules are problematic. Regularly, the Closing of the transaction does not take place on the same day as the Signing, but sometimes even considerably later. From a RETT perspective, this means that the requirements of Section 1 (3) No. 3 GrEStG (Signing) may be fulfilled at an earlier point in time, although this provision is suspended if taxation under § 1 (2b) GrEStG and thus the subsequent transfer of shares (Closing) "comes into consideration."

The tax authorities have so far taken the view that in a Share Deal, two taxable events are fulfilled, both of which trigger RETT independently of each other. Only if the strict requirements for timely and complete RETT notification of both transactions are met, double assessment of RETT may be waived. This view is also shared by several lower tax courts, including the FG Baden-Württemberg decision dated May 16, 2025, 5 V 846/25, the FG Berlin-Brandenburg decision dated January 31, 2025, 12 V 12129/24, and the decision dated January 9, 2025, 12 V 12130/24 (the latter is the underlying decision of the current decision regarding suspension of enforcement (AdV)).

DECISION OF THE BFH

The Federal Fiscal Court (BFH) expresses serious doubts as to the lawfulness of the tax administration's view and justifies this as follows:

• Neither the wording of Section 1(3) GrEStG nor the explanatory memorandum to the law provide for a time limit on the priority of application of Section 1(2b) GrEStG. Section 1(3) GrEStG is therefore subsidiary—without any time limits.
• The provisions subsequently introduced in Section 16(4b) and (5) of the GrEStG did not change this hierarchy. According to the explanatory memorandum, double taxation of one factual situation is not intended, and therefore, subject to the RETT notification requirements, a refund of the RETT amount shall be enabled with regard to the RETT upon Signing.
• This also corresponds to the prevailing opinion in tax literature, according to which the wording of Section 1 (3) GrEStG in particular does not contain any time component and the correction RETT notification under Section 16 (4b), (5) GrEStG merely set out a procedural simplification.
• On the basis that a double taxation would not be intended by law, a correction in accordance with general procedural rules (Section 164 (2) of the General Tax Code (Abgabenordnung - AO)) should also be considered. This particularly holds true in the case the tax office has knowledge that a Closing has already taken place, irrespective of the correction rules for RETT purposes pursuant to Section 16 (4a) and (5) GrEStG.

CONCLUSION AND OUTLOOK

Although the present AdV decision does not yet constitute a final highest instance court ruling, it nevertheless clearly strengthens the position of taxpayers with regard to possible double taxation in Share Deals, in particular in cases where a RETT notification of the Signing has been omitted or not made in time.

However, the question of whether or under what conditions a Closing "no longer comes into consideration" and thus respectively RETT under Section 1 (3) GrEStG can therefore be assessed again remains unresolved in the context of the present decision. In any case, according to the current view of the tax authorities, a waiver or non-assessment of RETT on Signing is only possible in case the Signing is notified in full and in a timely manner.

It remains to be seen whether the tax authorities will follow this opinion or respond, for example, with a non-application decree and/or law. Against this background, the following is recommended from the taxpayer's point of view:

• If RETT was assessed twice in Share Deals, an appeal should be filed against the assessment of real estate transfer tax pursuant to Section 1 (3) GrEStG (Signing) with reference to the BFH's AdV decision.
• Irrespective of this, the conclusion of a potentially RETT-related transaction pursuant to Section 1 (3) GrEStG (Signing) should still be notified in due form and time. Such RETT notification is not only necessary in view of the current administrative practice but also appears advisable in order to keep any other cases not clarified by the AdV decision (e.g., Share Deals without subsequent Closing) open to possible non-assessment or waiver to the greatest extent possible.