Date:
This article was written by
Certified Tax Advisor, Partner, M&A Real Estate Tax
Certified Tax Advisor, Lawyer, Director, National Office Tax & Legal
Certified Tax Advisor, Manager, National Office Tax & Legal
A change in the shareholder composition of a property‑owning partnership within, in the year in dispute still five, today ten years, such that at least, in the year in dispute 95%, today 90% of the shares are transferred civil‑law effective to new shareholders, directly or indirectly, is subject to real estate transfer tax (Section 1 (2a) of the German Real Estate Transfer Tax Act (Grunderwerbsteuergesetz; GrEStG)). The German Federal Fiscal Court (Bundesfinanzhof; BFH) addresses in this context in its judgment of March 25, 2026 (case no. II R 30/25) the question whether the conclusion and/or the termination of a trust relationship leads to a respective real estate transfer tax acquisition pursuant to Section 1 (2a) GrEStG.
The limited partners of a GmbH & Co. KG sold their partnership interests by agreement of November 19, 2013, subject to a suspensive condition consisting of the deposit of the purchase price and the registration of the change of partners in the commercial register. It was further agreed that the assignment of the partnership interests would take economic effect already on January 1, 2013 and that the former partners would hold their shares in trust for the purchasers retroactively from January 1, 2013. The trust relationship was terminable upon registration of the change of partners in the commercial register. In 2014 the purchasers deposited the agreed purchase price. They were subsequently entered as new limited partners in the commercial register on February 28, 2014.
The tax office issued a real estate transfer tax assessment both for the granting of the purchasers’ indirect partner status by virtue of the trust agreement of November 19, 2013 and for the direct transfer of the partner status by registration in the commercial register on February 28, 2014. The objection lodged against the first assessment was withdrawn; that assessment became final. The objection lodged against the second assessment was dismissed as unfounded; the action brought against it was upheld in first instance. The BFH disagreed.
The change in the shareholder composition through the direct transfer of the partner status on February 28, 2014 fulfills the real estate transfer tax offense of Section 1 (2a) GrEStG. Such a transfer of interests also occurs where a partner transfers his participation to the person for whom he had previously held the participation in trust. By acquiring the direct interest from the trustee, the trustor becomes, for the first time, a civil‑law partner of the partnership. That, prior to that, due to the contractual obligations of the trust agreement he economically held the position of an indirect partner of the partnership within the meaning of Section 1 (2a) GrEStG is irrelevant in the case of a direct change in the shareholder composition.
The assumption made by the fiscal court that the properties would no longer have been attributable to the GmbH & Co. KG for real estate transfer tax purposes at the time of the change of partners on February 28, 2014 because, by virtue of the agreement on the trusteeship of the former limited partners, they had already become the subject of a transfer pursuant to Section 1 (2a) GrEStG with effect from January 1, 2013, is incorrect. It can remain open whether the conclusion of the trust relationship met the requirements of the acquisition offense under Section 1 (2a) GrEStG.
Another real estate transfer tax acquisition offense, in particular under Section 1 (2) GrEStG, is likewise not relevant due to the lack of an immediate economic power of disposal with regard to the properties. The share in the assets of the GmbH & Co. KG granted by the trust agreement did not convey an economic power of disposal within the meaning of Section 1 (2a) GrEStG over the properties belonging to the company.
Notice:
In line with its judgment of November 5, 2025 (case no. II R 9/23; see BDO Insight) the BFH decided as expected. Given the procedural situation, this ultimately resulted in real estate transfer tax being payable twice in the present dispute: once for the granting of the indirect partner status (final assessment after withdrawal of the objection) and once for the direct transfer of the partner status (realization of a real estate transfer taxable transaction). The real estate transfer tax on the conclusion of the trust relationship could likely have been avoided if the appeal procedure against that real estate transfer tax assessment had been pursued further.