Germany: Will the double German RETT on share deals due to signing and closing be a thing of the past?

1. Problems with signing/closing a share deal in relation to German RETT

The acquisition of at least 90% of the shares in a German or foreign corporation that owns German real estate may result in double German RETT if the signing and closing of the share deal are separate, as is often the case. 

The signing alone usually fulfils the conditions for a share consolidation under Section 1 para. 3 no. 1 or no. 3 of the German German RETT Act (Grunderwerbsteuergesetz, "GrEStG"). The tax liability usually lies with the acquirer of the shares. If the closing, i.e. the actual transfer of the shares, occurs at a later date than the signing, a change of shareholders will also occur pursuant to Section 1 para. 2b GrEStG, which will result in German RETT at the level of the target company.

The tax authorities have so far assumed that both acquisition transactions are generally taxable independently of each other, so that German RETT is assessed once (regularly) against the purchasing party and once against the target company. However, upon application, the tax assessment for the signing can be waived (Section 16 para. 4a GrEStG). If one of the notifications of the two German RETT events is not submitted in full and on time, Section 16 para. 5 sentence 2 GrEStG excludes a waiver or amendment of the tax assessment for the signing. 

The substantive requirements for notification, combined with the short notification periods (two weeks or one month), often pose a practical challenge from several perspectives. The risk of double taxation therefore hangs over many transactions, meaning complicated cooperation clauses must be included in the company purchase agreement (SPA).

2. Federal Finance Court, decision of 9 July 2025, II B 13/25 (suspension of enforcement

Key points of the decision:

"It is legally questionable whether, in the case of an acquisition of shares in a limited liability company (GmbH) where the contractual acquisition transaction (signing) and the transfer of the GmbH shares (closing) take place at different times, two separate German RETT assessments can be levied pursuant to Section 1 para. 2b) and Section 1 para. 3 no. 1 GrEStG if the tax office is aware at the time of assessing the German RETT pursuant to Section 1 para. 3 no. 1 GrEStG that the transfer of the GmbH shares (closing) has already taken place."

The Federal Finance Court (Bundesfinanzhof, “BFH”) has already expressed doubts about the tax authorities' fundamental view that double levying of German RETT for signing and closing is required by law. The wording of Section 1 para. 3 GrEStG ("insofar as taxation under paragraphs 2a and 2b does not apply") does not imply that there is a time limit, meaning that priority only applies if the taxation dates coincide. In the BFH's opinion, the legislature may have assumed such a time restriction when introducing Section 16 para. 4a and 5 GrEStG. However, it is doubtful whether and, if so, to what extent the corrective provision can restrict the substantive priority of application in Section 1 para. 3 GrEStG.

In any case, if the German RETT was assessed for the signing after the closing had already taken place, as was the case here, and the tax office was aware of this, the BFH considers the double assessment of German RETT to be legally questionable. 

Although the proceedings only involved a preliminary examination as part of a suspension of enforcement procedure (Aussetzung der Vollziehung), the BFH clearly questioned the legality of the current practice of double assessment of German RETT. It is therefore likely that the BFH will ultimately confirm these legal doubts in any main proceedings.

3. What should you do now?

If you have been issued with two German RETT assessments in the context of a share deal – for example, due to a failure to notify, an incorrect notification or a late notification – and these assessments have not yet been finalised, you should take action. You should lodge an objection against the tax assessment for the signing and, at the same time, apply for the enforcement and proceedings to be suspended.

We would be happy to review your individual situation and support you in enforcing your rights against the tax authorities. Please get in contact. Our tax law proficiency is at your service.

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The above information is for informational purposes only and does not constitute legal or tax advice.