Federal Tax Court expresses doubt about double RETT arising on share deal transaction

In an interim court order dated 9 July 2025 that was published on 31 July 2025, Germany’s federal tax court expressed doubts about the legality of double assessments of real estate transfer tax (RETT) that might apply in share deal situations where the signing and closing of a share purchase agreement (SPA) occurs on two different dates. Based on the view of the tax authorities, the signing of an SPA and the closing of the related transaction (which occur on different dates) might each qualify as a separate RETT triggering event requiring a timely filed notification to the responsible tax office. In case both notifications are filed on time, the closing event “supersedes” the signing event and RETT is assessed only for the closing event. In case the RETT notifications are not filed on time, RETT is assessed for both events, resulting in double RETT for one and the same transaction. In its decision, the federal tax court expressed doubts about the legality of the tax authorities’ approach.

The decision of the federal tax court was based on the following facts:

In a share sale transaction regarding the shares in a German real estate-owning corporate entity (GmbH), the notarization of the SPA occurred on 11 March 2024 (signing event). The closing of the transaction and the actual transfer of the shares occurred on 29 March 2024 (closing event), after the purchase price was paid. The notary responsible for the notarization of the SPA informed the responsible tax office about the signing of the SPA within the required one-month period, on 4 April 2024. However, no notification about the closing and the actual transfer of the shares was filed with the responsible tax office.

The tax office then issued RETT assessment notices for both the 11 March 2024 signing event and the 29 March 2024 closing event. Based on the German RETT rules, the RETT assessment for the signing event was assessed against the acquirer of the shares (as, at the level of the acquirer, at least 90% of the shares in the GmbH were combined for the first time). The RETT resulting from the closing event was assessed against the GmbH itself as there was a change of at least 90% of its shareholders.

The acquirer of the shares filed an appeal against the RETT assessment notice that was issued as a result of the signing event and, at the same time, applied for a suspension of the enforcement of the assessment notice. Both the tax office and the local tax court of Berlin-Brandenburg rejected the suspension application.

In the view of the German tax authorities, the signing and the closing events in a share deal transaction both qualify as RETT triggering events if the signing and closing events occur on separate dates. This result can only be avoided if the RETT notifications for both events are filed in full compliance with the requirements and within the prescribed notification deadlines (one month or two weeks, depending on the transaction) with the responsible German tax office. In case the notifications are filed on time, any RETT arising from the signing event will be waived and RETT should only become payable as a result of the closing event.

In its interim court order, the federal tax court expressed doubts about the tax authorities’ practice of issuing two RETT assessment notices for the same transaction and granted an enforcement suspension until one month after the issuance of the appeals decision by the tax office. The federal tax court in its decision sided with German tax commentators who argue that the rules in the German RETT code describing RETT triggering events include an ordering rule. This rule prioritizes the closing event over the signing event and does not include any timing limitations, i.e., the priority of the closing event over the signing event applies even if there is a time gap between the two events. The federal tax court stated in the interim court order that it based its decision on its view that it should not make a difference whether the signing and closing events occur simultaneously or whether there is a time gap in between. The closing event takes priority in both situations. The tax court also took into account the fact that the responsible tax office was already aware that the closing event had occurred at the time it issued the RETT assessment notice for the signing event.

Deloitte Germany comments

The interim court order issued by the federal tax court is the first statement from a court regarding the signing/closing issue in the RETT area. Although it is not a regular tax court opinion and was issued through an interim court order procedure, it offers valuable insight into the federal tax court’s perspective on the matter. The tax court expressed serious doubts that a double RETT assessment for the same transaction in case of non-compliance with the applicable RETT filing obligations is in line with the wording of the law and the intention of the legislator. Furthermore, the court considered this to be questionable in the case at hand because the tax office was already aware that the closing event had occurred when issuing the RETT notices for the two events.

As mentioned, the decision of the tax court was as an interim court order to decide on the taxpayer’s request to suspend the enforcement of the RETT assessment notice. In such a situation, the court may suspend the enforcement of the tax notice if the court has serious doubts about the notice’s legality. Even though the decision is favorable to the taxpayer (and other tax practitioners dealing with this issue on a regular basis), the decision of the tax office in the pending appeals procedure and potential subsequent court proceeding (which may require a couple of years to conclude) will provide full and final clarity on this matter. Accordingly, all RETT assessment notices that currently result in double RETT assessments for the same transaction in a share deal scenario due to the signing/closing issue should be appealed using the arguments of the federal tax court in this case. Additionally, a request for a stay of the appeal proceedings should be submitted until a final decision in this case is available.

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