Does the merger of a LTD incur real estate transfer tax?

If the assets of the transferring company include real estate, then according to § 1 I Nr. 3 Real Estate Transfer Tax Act (GrEStG), real estate transfer tax generally applies once during the transformation through merger.

§ 1 regulates the following:

Subsection (1) The following legal transactions are subject to real estate transfer tax, insofar as they relate to domestic real estate: ...

No. 3 the transfer of ownership, when no legal transaction establishing a claim to conveyance has preceded and no formal conveyance is required.

The legislator has created exceptions in § 6a GrEStG for restructuring within a corporate group. If this exception applies, the real estate transfer tax may be omitted.

In its decision of 16.10.2014, the Nuremberg Finance Court opened the applicability of the regulation for parent-daughter mergers.

"The contested decision on the separate determination of the tax bases for real estate transfer tax of 13.08.2013 is unlawful and violates the plaintiff's rights. Although the real estate acquisitions covered in the decision are taxable according to § 1 Abs. 1 Nr. 3 GrEStG, they are fully tax-privileged according to § 6a GrEStG, since the merger of the dependent B-GmbH onto the plaintiff as the 'controlling company' is covered by the benefit scope of § 6a GrEStG."

Following the finance office's appeal, the matter was referred to the BFH (Federal Finance Court) for final clarification.

When real estate is involved, it is always advisable to seek tax advice before the transformation. We are happy to provide you with an assessment and consultation.