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Amendment of Share Deal Taxation According to Draft Proposal of the Federal Ministry of Finance for a Real Estate Transfer Tax Amendment Act

28 July 2023

Starting on 1 January 2024, the Real Estate Transfer Tax Act (Grunderwerbsteuergesetz – GrEStG) is to be comprehensively amended. The official trigger for the draft proposal sent by the Federal Ministry of Finance to the associations is the Act on the Modernisation of Partnership Law (Gesetz zur Modernisierung des Personengesellschaftsrechts – MoPeG) as of 10 August 2021, which shall come into effect on 1 January 2024. Through section 713 German Civil Code (Bürgerliches Gesetzbuch – BGB), this act shall redefine that German partnerships, from that point forward, shall no longer have what is called joint property (Gesamthandsvermögen).

However, it also aims to clarify the supplementary rules (Ergänzungstatbestände) applicable to share deals, which entail considerable legal uncertainties for both taxpayers and tax authorities. In particular, it is unclear how the supplementary rules relate to each other and how properties are attributed to companies in participation chains.

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