BFH Decision of November 25, 2015, II R 62/14

§ 6a Real Estate Transfer Tax Act - Tax relief for restructuring within a group

Federal Finance Court Decision from 25.11.2015, II R 62/14
Prior Instance: FG Nuremberg from 16.10.2014, 4 K 1059/13
Request for the Ministry of Finance to join: Conditions for tax exemption according to § 6a GrEStG

Guidelines
The Ministry of Finance is requested to join the revision process and to comment on the relationship between § 6a sentences 3 and 4 GrEStG, according to which § 6a GrEStG is not applicable to transformation processes where an entity is dissolved or newly created (merger, division, spin-off, or asset transfer for new formation), in relation to § 6a sentence 1 GrEStG, which includes these transformation processes in the scope of the regulation by referring to § 1 Abs. 1 Nrn. 1 to 3 UmwG, as well as to discuss the possible character of aid of § 6a GrEStG.
Verdict

The Federal Ministry of Finance is requested to join.
Facts

1
I. The plaintiff and revision defendant (plaintiff), an active AG, is involved as the sole shareholder in a number of companies. Among others, she was the sole shareholder of B-GmbH, which held real estate in the districts of the tax offices B and C. Between the plaintiff and B-GmbH, there was a profit transfer agreement and tax groupings concerning corporate tax, business tax, and VAT. B-GmbH was in turn the sole shareholder of E-GmbH.
2
With a merger agreement from August 1, 2012, B-GmbH as the transferring entity according to § 1 Abs. 1 Nr. 1 i.V.m. § 2 Nr. 1 of the Transformation Act (UmwG) merged into the plaintiff as the acquiring entity. The merger was registered in the commercial register on September 24, 2012. The plaintiff's participation in B-GmbH had already existed for more than five years at that time, amounting to at least 95%. With the registration of the merger in the commercial register, the assets of B-GmbH transferred to the plaintiff and B-GmbH was dissolved (§ 20 Abs. 1 Nr. 1, Nr. 2 sentence 1 UmwG). From this point on, the plaintiff was the sole shareholder of E-GmbH.
3
The defendant and revision plaintiff (the tax office --FA--) saw in the transfer of the real estate of B-GmbH to the plaintiff a taxable acquisition process according to § 1 Abs. 1 Nr. 3 of the Real Estate Transfer Tax Act in the version applicable in 2012 (GrEStG) and eventually set the tax bases for the real estate transfer tax for the plaintiff according to § 17 Abs. 3 Satz 1 Nr. 1 GrEStG. Here, the FA denied the tax advantage according to § 6a GrEStG. The objection was unsuccessful.
4
The finance court (FG) granted the claim for exemption from tax according to § 6a GrEStG. The decision is published in Decisions of the Finance Courts (EFG) 2015, 424.
5
With the revision, the FA argues, referring to Tz. 5 Abs. 1 and Example 1 of the uniform decrees of the top financial authorities of the states from June 19, 2012 (BStBl I 2012, 662), that § 6a GrEStG is not applicable, since the "consortium" of the entities involved in the transformation process was terminated due to the merger.
6
The FA requests that the preliminary decision be overturned and the complaint be dismissed.
7
The plaintiff requests that the revision be dismissed as unfounded.
Reasons for the Decision
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II. The invitation to join is based on § 122 Abs. 2 of the Financial Court Order. The current revision procedure concerns the interpretation of § 6a GrEStG and thus a tax based on federal law and a legal dispute over federal law. The interpretation of § 6a GrEStG presents difficulties of such weight that the Senate considers the invitation to join to be appropriate. This concerns the application of the pre- and retention periods of § 6a sentence 4 GrEStG in merger cases as well as issues related to Union law.
9
1. The transfer of ownership of the real estate of B-GmbH to the plaintiff due to the merger is subject to real estate transfer tax according to § 1 Abs. 1 Nr. 3 GrEStG. These are statutory transfers of ownership where no legal transaction that establishes a claim to transfer of ownership has preceded, and no conveyance was necessary.
10
2. In the present proceedings, it must be determined whether the tax for these legal transactions should not be levied according to § 6a GrEStG.
11
a) According to § 6a sentence 1 half-sentence 1 GrEStG, tax is not levied for a taxable legal transaction according to § 1 Abs. 1 Nr. 3, Abs. 2a, or 3 GrEStG due to a transformation i.S. of § 1 Abs. 1 Nrn. 1 to 3 UmwG. § 1 Abs. 1 Nr. 1 UmwG concerns mergers, § 1 Abs. 1 Nr. 2 UmwG division, spin-off, and outsourcing, and § 1 Abs. 1 Nr. 3 UmwG the transfer of assets.
12
The non-levying of tax according to § 6a sentence 1 half-sentence 1 GrEStG requires, according to the wording of § 6a sentence 3 GrEStG, that only a controlling company and one or more dependent companies of this controlling company or several dependent companies of a controlling company are involved in the transformation process. Dependent in this sense is, according to § 6a sentence 4 GrEStG, a company in which the controlling company has been continuously involved directly or indirectly or partly directly, partly indirectly to at least 95% within five years before the legal transaction and five years after the legal transaction.
13
b) Transformation processes in which an involved company is dissolved or newly created fall outside the scope of § 6a GrEStG according to the wording of § 6a sentences 3 and 4 GrEStG, because such a company cannot meet the requirements of dependency defined in § 6a sentence 4 GrEStG, and thus contrary to the requirements of § 6a sentence 3 GrEstG, at least one company involved in the transformation process is not "dependent" on the controlling company.
14
According to the wording of § 6a sentences 3 and 4 GrEStG, all mergers (§ 1 Abs. 1 Nr. 1, §§ 2 ff. UmwG), division (§ 1 Abs. 1 Nr. 2, § 123 Abs. 1 UmwG), spin-off and outsourcing of assets for new formation (§ 1 Abs. 1 Nr. 2, § 123 Abs. 2 Nr. 2, Abs. 3 Nr. 2, §§ 124 ff. UmwG), as well as asset transfer (§ 1 Abs. 1 Nr. 3, §§ 174 ff. UmwG), if they lead to the dissolution of the transferring entity, are not favored according to § 6a GrEStG. § 6a GrEStG would have a very limited scope of application according to the literal interpretation and application of § 6a sentences 3 and 4 GrEStG. Essentially, only the spin-off and outsourcing of assets for inclusion by transferring the spun-off or outsourced part of the assets or the spun-off or outsourced parts of the assets as a whole to an existing or several existing entities (§ 123 Abs. 2 Nr. 1, Abs. 3 Nr. 1 UmwG) would be fundamentally eligible for favor.
15
c) Therefore, the question arises whether the legislator intended to limit the scope of this regulation so extensively contrary to the provisions in § 6a sentence 1 half-sentence 1 GrEStG and whether the goals pursued by the legislator with the regulation can be achieved with such a narrow scope of tax favorability. According to the report of the Finance Committee of the German Bundestag (BTDrucks 17/147, p. 10), transfers of real estate within the framework of restructuring in transformation processes should be favored for real estate transfer tax purposes if it is a legal transaction i.S. of § 1 Abs. 1 Nrn. 1 to 3 UmwG. The Finance Committee further stated that the effect of the favorability must benefit the beneficiaries as evenly as possible. It must not depend on coincidences and therefore occur arbitrarily, but must derive directly from the relieving decision underlying the favorability norm. For this reason, transformation processes leading to a change of legal entity at the property in the sense of GrEStG are favored to eliminate growth impediments. The capture of all such processes serves the required even effect of the favorability. However, the favorability is limited to group-related facts to ensure that the favorability acts precisely and does not lead to an unintended carry-along effect. The accompanying restrictions through the pre- and retention period normed in § 6a sentence 4 GrEStG serve this purpose.
16
d) The financial administration primarily focuses on the characteristic of the "consortium," which is not provided in the wording of § 6a GrEStG, in the decrees in BStBl I 2012, 662. The consortium, which must be determined for the respective transformation process, consists of the controlling company and the dependent company or companies involved in the transformation process as well as the dependent companies mediating this participatory relationship. Transformation processes that establish or terminate the consortium are not favored according to § 6a GrEStG according to Tz. 2.1 Abs. 3 sentence 1 of the decrees. Accordingly, according to Tz. 2.1 Abs. 3 sentences 2 and 3 of the decrees, outsourcings or spin-offs for new formation from a controlling company as well as the merger of the last dependent company involved in the transformation process onto the controlling company are not favored, as these transformation processes establish or terminate the consortium. This also applies according to the examples contained in Tz. 2.1 of the decrees, even if the parent company, onto which the subsidiary is merged, is involved in another company to at least 95% or the subsidiary itself was involved in a company to at least 95%, which in turn meets the requirements of a dependent company of the parent company according to § 6 sentence 4 GrEStG.
17
On the other hand, according to Tz. 5 Abs. 1 sentence 3 and Example 1 to Tz. 5 of the decrees, the merger of a subsidiary onto another may be favored. It is required that both subsidiaries have observed the retention period of five years (Tz. 4 of the decrees) and that the acquiring dependent company continues to exist for five years and that the minimum participation of 95% remains. That the transferring company is dissolved in the transformation and thus does not meet the requirements of § 6a sentence 4 GrEStG for a dependent company is harmless according to Tz. 5 Abs. 1 sentence 3 of the decrees. This decree regulation is clearly an exception allowed by the financial administration from the wording of § 6a sentences 3 and 4 GrEStG. Moreover, regarding the retention period, any change in the type of participation (e.g., complete or partial shortening or lengthening of the participation chain) is harmless. The only requirement is that the required minimum participation of 95% of the controlling company determined at the time of the realization of the acquisition process through transformation remains (Tz. 4 last paragraph of the decrees). The question arises whether and for what reasons a shortening or lengthening of the participation chain should not also be harmless for the retention period.
18
No further exceptions from the wording of § 6a sentences 3 and 4 GrEStG are provided in the decrees in BStBl I 2012, 662. The regulation contained in Tz. 5 Abs. 1 of the uniform state decrees from December 1, 2010 (BStBl I 2010, 1321), according to which the retention period does not have to be observed in the case of a merger onto the controlling company, was not included by the financial administration in the decrees in BStBl I 2012, 662, without this being based on a change in the law.
19
e) So far, no uniform opinion has emerged on the issue addressed, neither in the financial court jurisprudence (cf. on the one hand, the judgment of the FG Munich from July 23, 2014 4 K 1304/13, EFG 2014, 1703, legally binding, and on the other hand, the judgment of the FG Düsseldorf from May 7, 2014 7 K 281/14 GE, EFG 2014, 1424, with annotation Fumi, revision filed, file number of the Federal Finance Court: II R 36/14) nor in the literature (cf. on the one hand, Hofmann, Real Estate Transfer Tax Act, Commentary, 10th ed., § 6a Rz 17; Pahlke, Real Estate Transfer Tax Act, Commentary, 5th ed., § 6a Rz 39; Schanko, The Group 2013, 122, 124, and VAT and Traffic Tax Law 2011, 152; on the other hand, Viskorf in Boruttau, Real Estate Transfer Tax Act, 17th ed., § 6a Rz 93; Weilbach, GrEStG, status June 10, 2015, § 6a Rz 36; Teiche, Business Consultant --BB-- 2012, 2659, 2665 f.; Jorde/Trinkaus, Corporate Taxation 2012, 649, 654; Behrens, German Tax Law 2012, 2149, 2050 ff.; Wischott/Schönweiß/Graessner, New Economic Letters for Tax and Business Law 2013, 780, 790; Mensching/Tyarks, BB 2010, 87, 91; Schaflitzl/Stadler, The Company 2010, 185, 188).
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f) The Federal Ministry of Finance (BMF), which is requested to join, is asked to comment on how, in its view, taking into account the constitutional requirements for tax laws, which the Finance Committee also addressed in BTDrucks 17/147, p. 10, the scope of application of § 6a GrEStG should be defined.
21
3. In terms of Union law, it will also be necessary to examine whether § 6a GrEStG constitutes newly introduced aid within the meaning of Art. 107 Abs. 1 of the Treaty on the Functioning of the European Union (TFEU).
22
The BMF is therefore asked to inform whether a state aid approval procedure was conducted and what the result was, if applicable, or otherwise to comment on the question of the existence of aid.