Germany cuts transaction friction in property share deals

Germany has quietly resolved one longstanding source of transaction friction in its commercial real estate market. A law published on 2 July removes the risk of being charged real estate transfer tax twice on the same share deal — a problem that has added unnecessary cost and complexity to institutional real estate acquisitions since 2021.

The underlying issue was simple enough. When a buyer acquires a property-owning company through a share deal, real estate transfer tax is due. Under the rules introduced in 2021, however, tax could effectively be triggered twice: once when the share purchase agreement was signed and again when the transaction completed, if those two events occurred on different dates. Since almost every significant acquisition involves a gap between signing and closing — to satisfy regulatory approvals, financing conditions or other completion requirements — the issue had become a recurring feature of almost every major transaction.