CJEU ruling on Portuguese RETT may have implications for purposes of German RETT

RETT provision at issue relates to certain transactions regarding the transfer of shares in limited liability companies

On 4 June 2026, the Court of Justice of the European Union (CJEU) ruled that a provision of Portuguese real estate transfer tax (RETT) law relating to the taxation of the transfer of shares in certain cases is incompatible with Council Directive 2008/7/EC concerning indirect taxes on the raising of capital. This article discusses the potential implications for German RETT purposes.

CJEU decision

In the case decided by the CJEU, the share capital of a Portuguese company was established by its shareholder through contributions in kind of the shares in several subsidiaries. At least one of the subsidiaries whose shares were contributed into the newly set up Portuguese parent entity owned Portuguese real estate. According to the Portuguese tax authorities, this transaction triggered Portuguese RETT. Under Portuguese RETT law, the acquisition of shares in limited liability companies is subject to Portuguese RETT if these companies own real estate and, because of this transfer, one of the shareholders becomes the owner of at least 75% of the company’s share capital.

The taxpayer, however, took the position that the Portuguese RETT provisions are incompatible in this regard with Council Directive 2008/7/EC. The CJEU agreed and ruled that the provision of the Portuguese RETT law at issue is incompatible with Council Directive 2008/7/EC.

Potential implications for German RETT

The German RETT law includes provisions similar to those at issue under the Portuguese RETT law. In particular, the transfer of at least 90% of the shares in a company owning real estate is subject to German RETT. Although there is an exemption for intragroup transactions, the exemption only applies to certain transactions and requires a minimum holding of 95%. Further, a pre-retention and post-retention period of five years for each must be observed prior and after the transaction.

The intent of Council Directive 2008/7/EC is to ensure that capital injections into and restructuring of corporations within the EU are not burdened by indirect taxes. Transactions covered by the directive include, among others: the formation of corporations through contributions in kind; capital increases through the contribution of assets or shareholdings; contributions of shares in subsidiaries, mergers, and demergers; and certain restructurings within corporate groups. The directive does not contemplate any specific requirements for the relief. It might, therefore, be questionnable if the German RETT law in this regard is compatible with EU law in cases covered by Council Directive 2008/7/EC.

Further, there is currently a case pending before the German federal tax court (BFH) concerning the compatibility of the imposition of RETT with Council Directive 2008/7/EC in the case of mergers. The BFH might conclude that no RETT may be imposed due to the incompability with the directive or defer this question to the CJEU for further consideration.

Deloitte Germany’s comments

In the case of transactions that have already been completed, it should be examined whether an appeal against the imposition of RETT on the basis of the CJEU ruling is possible. This applies, in particular, to cases of share consolidation or changes in shareholders that were linked to an intercompany restructuring within the scope of Council Directive 2008/7/EC.

Taxpayers with open cases should ensure that their cases are kept open with reference to the CJEU ruling and the pending case at the BFH.

For future transactions, it is advisable to carefully examine whether the transaction in question falls within the scope of the Council Directive 2008/7/EC or whether the transaction might be structured in a way to fall within the scope. In such cases, an exemption from RETT based on the CJEU ruling could be applied for and, in the case of a denial of the RETT exemption, an appeal against a negative decision by the German tax authorities could be filed. A detailed analysis of the legal situation is required on a case-by-case basis.

The CJEU ruling is likely to have far-reaching implications on the German RETT law. Against this background, the German legislator should consider making the necessary adjustments to ensure that RETT taxation complies with EU law. Until this happens, suitable cases should be kept open.

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