The Federal Constitutional Court held in 2006 that a valuation using the simplified cash-flow method used for purposes of the Inheritance and Gift Tax Act does not comply with the equality principle in article 3 of the German Constitution. According to a 2009 decision of the Federal Tax Court, this rule also should apply in the case of RETT where tax is assessed based on a specifically determined value rather than the purchase price (the valuation of property in such cases typically results in a value of approximately 60% to 80% of the fair market value). However, only the Federal Constitutional Court has jurisdiction to determine whether a tax law or a provision of a tax law is unconstitutional.
The local tax court of Muenster ruled on 25 August 2010 (case reference 3V936/10F) that the reasoning of the Federal Constitutional Court in a case involving a valuation for Inheritance and Gift Tax purposes also applies to a valuation for RETT purposes. The court suspended the execution of a special assessment of the value of property for RETT purposes based on the assumption that the Federal Constitutional Court may conclude that the provisions relating to the determination of the special tax value for RETT violate the constitution and are no longer applicable to transactions carried out after grandfathering rules for the Inheritance and Gift Tax Act expired; this should affect all open cases where the RETT triggering event took place after 2008. It is interesting that the local tax court held that the suspension of the execution is not hindered by any fiscal interest of the state even if a significant number of value assessments and RETT assessments could be affected. According to regulations issued by the tax authorities on 1 April 2010, RETT assessments are to be issued on a preliminary basis if they are based on these standard assessed values.
Ansprechpartner
Dr. Bettina Lieber | Düsseldorf
