‘Tougher tax rules in Germany a worry for investors’

A new bill is proposing to change the real estate transfer tax system (RETT) by the end of the year and it is expected to come into force on January 1st.

Tougher rules on property tax that are about to be approved by the German Bundestag and Bundesrat are causing some concern among investors, delegates heard at Real Asset Media’s Germany Investment Briefing, which was held in London this week.

Christiane Conrads, Head of German Real Estate Desk, PwC Legal AG, Markus Beran, Head of Origination International Investors, Berlin Hyp AG, Michael Becken, Managing Director, BECKEN Invest GmbH, Boon Chye Loh, CEO, Singapore Exchange Ltd, Richard Divall, Head of Cross Border Capital Markets, EMEA, Colliers International and Robert Abt, Chief Transaction Officer, Round Hill Capital discuss the current Real Estate Investment Market in Germany. Filmed at the Investment Briefings Germany Briefing in London by Real Asset Media, May 2019.

A new bill is proposing to change the real estate transfer tax system (RETT) by the end of the year and it is expected to come into force on January 1st. RETT currently varies between 3.5% and 6.5% depending on the State. The reforms are aimed at reducing the mitigation schemes and eliminating loopholes.

It will affect share deals (the acquisition of shares in the company owning the real estate rather than the real estate itself) which are often preferred by investors for tax reasons.

‘It changes the dynamics of the German market,’ said Christiane Conrads, Head of German Real Estate Desk, PwC Legal UK. ‘It will change the way deals are structured’.

The threshold at which RETT is triggered is lowered from 95% to 90%, while the holding period for shares will be increased from the current 5 years to 10 years.

‘A ten-year holding period for the shares is not good for investors,’ said Michael Becken, Managing Director, Becken Invest. ‘I think the consequence will be that there will be less share deals in the future’. 

The change is overdue, said Markus Beran, Head of Origination International Investors, Berlin Hyp: ‘The system had become a tax avoidance scheme and had created an imbalance. The proposed changes take us back to best practice, close a loophole, affect everyone and create a level playing field. They are welcome’.

Richard Divall, Head of Cross Border Capital Markets, EMEA, Colliers International, said that ‘the new tax rules are causing some concern among investors. We’ll have to see what the impact on the market will be’.


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