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German Tax and Legal News

Amended guidance issued on RETT exemption in restructurings

The tax authorities of the Federal States have amended the guidance on the exception for intragroup restructurings under the RETT-Act.

On 19 June 2012, the tax authorities of the Federal States issued amended guidance on the Real Estate Transfer Tax (RETT) that clarifies the RETT exemption for certain restructurings. The guidance also includes examples of how the exemption should be applied.

A direct transfer of real property, a change of partners in a partnership or a unification of shares are exempt from RETT if they are part of a restructuring (merger, demerger, spinoff and hive-down) specified in the Reorganization Act. To qualify for the relief, the intergroup restructuring must involve a “controlling enterprise” and one or several “controlled companies.” According to the amended guidance, only the top entity in the 95 % (or more)-ownership chain can qualify as the controlling enterprise. A corporate entity, partnership or an individual can be regarded as a controlling enterprise for purposes of the rule if it is an entrepreneur within the meaning of the VAT Act. If the controlling entity/person does not qualify as such an entrepreneur, an analysis must be made of the entity held by the controlling entity/person (i.e. the next entity in the ownership chain). This should also be the case if the top controlling entity is a mere holding company.

The amended guidance also clarifies that if the controlling entity is a part of a VAT group and, therefore, not an entrepreneur by itself, it nevertheless can be a controlling enterprise for RETT purposes.

The guidance includes restrictions on the RETT exemption in restructurings that lead to a formation or termination of the group. For instance, a restructuring leading to the formation of a “controlled company” or an upstream merger of the directly owned “controlled company” into the “controlling enterprise” will not be exempt from RETT. There also are clarifications to the holding period requirement in the event of several consecutive restructurings.

The amended rules should be applicable to all open cases. However, for restructurings that took place between 31 January 2009 and 13 July 2012, the taxpayer may choose to apply the previous guidance.

If you have any questions, please contact the authors of this article at or your regular Deloitte contact.

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