The real estate transfer tax on share deals was fundamentally reformed from 2025. The new thresholds and supplementary provisions in § 1(2a), (2b), (3) and (3a) GrEStG require careful structuring of share transfers. This article explains the changes and outlines remaining structuring options.
Real Estate Transfer Tax on Share Transfers -- The New Rules from 2025
Real estate transfer tax (RETT) in Germany is triggered not only by traditional property purchases but also by certain share transfers in companies that hold real estate. These so-called share-deal provisions were significantly tightened on 1 January 2025. For entrepreneurs, investors and shareholders holding real estate assets, understanding the new rules and factoring them into transactions in good time is essential.
Background: Why Reform Was Necessary
The legislator has always conceived RETT on share deals as a complement to the direct acquisition of property. Without these provisions, real estate could be transferred simply by selling company shares, avoiding RETT entirely. In the past, however, the thresholds were generous enough to permit numerous structuring models that achieved a tax-free transfer.
The former threshold of 95 per cent was systematically exploited by investors: by retaining a minority stake of just over 5 per cent -- often with a co-investor or trustee -- RETT could be avoided altogether. The tax authorities regarded this as a circumvention of the statute's purpose. The legislator responded with the 2024 Annual Tax Act, which substantially lowered the thresholds.
The Four Supplementary Triggering Events at a Glance
§ 1(2a) GrEStG -- Change of Partners in Partnerships
This provision captures a change in the partner composition of a real-estate-holding partnership (e.g. KG, GbR, OHG). RETT is triggered when, within ten years (previously five), at least 90 per cent (previously 95 per cent) of the interests in the partnership assets pass to new partners.
Key changes:
- Threshold lowered from 95 to 90 per cent
- Observation period extended from five to ten years
- Aggregation of direct and indirect changes in ownership
This tightening means that a partner must now retain at least 10 per cent of the interests for ten years to avoid RETT -- a considerably greater economic commitment than before.
§ 1(2b) GrEStG -- Change of Shareholders in Corporations
Section 1(2b) GrEStG, introduced by the Real Estate Transfer Tax Modernisation Act, extends the change-of-ownership logic to corporations (GmbH, AG). Tax is triggered when, within ten years, at least 90 per cent of the shares pass to new shareholders.
Special features for corporations:
- The provision captures both direct and indirect share transfers
- In multi-tier holding structures, interests are computed on a look-through basis
- Economic changes in ownership without formal share transfers may also be captured
- The trigger applies regardless of whether the transfer is for consideration or gratuitous
§ 1(3) GrEStG -- Consolidation of Interests
RETT is also triggered when an acquirer for the first time consolidates at least 90 per cent (previously 95 per cent) of the interests in a real-estate-holding entity. This applies to both partnerships and corporations.
Unlike subsections 2a and 2b, what matters here is not a change of ownership within a specific period but the concentration of interests in the hands of a single legal entity or economic unit.
Practically relevant scenarios:
- Acquisition of shares in a real-estate GmbH by an investor up to the 90 per cent threshold
- Mergers of entities that together exceed the threshold
- Contribution of shares to a holding company
§ 1(3a) GrEStG -- Economic Interest
The catch-all provision in § 1(3a) GrEStG covers situations where a legal entity obtains an economic interest of at least 90 per cent without a formal consolidation of interests under subsection 3. This concerns in particular:
- Trust arrangements where the settlor holds the economic interest
- Sub-participations and silent partnerships with extensive rights
- Voting agreements that give one entity de facto control
- Option rights that economically anticipate a future acquisition
This provision prevents the threshold reductions in the other subsections from being circumvented by economic structuring.
Tax Base and Rates
For the supplementary triggering events, RETT is calculated on the assessed property value under §§ 138 et seq. of the Valuation Act (BewG). This value is determined by the tax office by separate assessment and is oriented towards the property's market value.
The tax rate varies by federal state between 3.5 and 6.5 per cent. For large property portfolios, RETT can therefore quickly reach seven-figure amounts.
Remaining Structuring Options
Despite the tightening, structuring possibilities remain that require thorough tax and legal review:
Maintaining an Interest Below the Threshold
Retaining a stake of more than 10 per cent through an existing or co-shareholder can still avoid RETT -- provided the interest is maintained for the full ten-year period and is not a mere nominee arrangement.
RETT-Blocker Structures
The previous RETT blockers, in which an intermediate entity with a minority shareholder was used, no longer work in their traditional form. The reduction to 90 per cent and the expanded attribution rules significantly restrict the scope for structuring.
However, multi-tier holding structures may still be useful under certain conditions, particularly where the minority interest is economically substantial and the minority shareholder has genuine participation rights.
Temporal Staging
The extension of the observation period to ten years makes it more difficult to stage share transfers over time. Nonetheless, a phased transfer over more than ten years may remain an option if it is commercially justifiable.
Extracting the Property Before the Share Transfer
In certain cases it may be more advantageous to extract the property from the entity before the share transfer and sell it separately. Although this triggers RETT and potentially income tax at the property level, the overall burden may be lower than RETT on the entire share deal.
Reorganisations and Exemptions
The GrEStG provides exemptions for certain reorganisations under §§ 5, 6 and 6a. In particular, § 6a GrEStG exempts intra-group reorganisations from RETT under certain conditions. This exemption requires a pre- and post-holding period of ten years (previously five).
Compliance Requirements and Notification Obligations
The tightening of the substantive requirements is accompanied by heightened notification obligations. Every share transfer in a real-estate-holding entity must be reported to the competent tax office, even where the thresholds are not reached. Notification must be made within two weeks of the transaction (§ 19 GrEStG).
Failure to comply may result in late-filing surcharges and, in serious cases, criminal consequences. For complex group structures, establishing an internal monitoring system that captures all RETT-relevant transactions and ensures timely notification is advisable.
Practical Recommendations
For entrepreneurs and investors with real estate assets, the following action points arise:
- Stocktake: Identify all entities in your portfolio that hold real estate and review the current ownership structure
- Review legacy cases: The new thresholds also apply to observation periods already running -- check whether past share transfers, combined with future transactions, could exceed the new thresholds
- Adjust structures: Existing RETT-blocker structures should be reviewed for their effectiveness under the new rules and adapted where necessary
- Extend due diligence: In real estate transactions, RETT due diligence must cover the new triggering events and the expanded attribution rules
- Calculate the overall tax burden: RETT should be incorporated into the profitability analysis of every transaction as a material cost factor
Conclusion
The reform of real estate transfer tax on share transfers from 2025 marks a paradigm shift. The reduction of thresholds from 95 to 90 per cent and the extension of observation periods to ten years significantly narrow the previous scope for structuring. Share deals as a tool for RETT optimisation have become markedly less attractive.
Nonetheless, structuring possibilities remain that require sound tax and legal advice. At compleneo, we advise you on an interdisciplinary basis on the RETT implications of your real estate transactions -- from structuring through due diligence to compliance. Get in touch with us.
