german real estate transfer tax

Transcription

GERMAN REAL ESTATE
TRANSFER TAX
Structuring option for improvement of fund performance
Bödecker Ernst & Partner | Steuerberater . Rechtsanwälte
AGENDA
GERMAN RETT
STRUCTURING
IDEA
CONTACT
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GERMAN RETT
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DRAFT - FOR DISCUSSION PURPOSES ONLY
GERMAN RETT INCREASED TO 4.5 - 5 %
Sale of German property triggers real estate transfer tax.
EUR 5 - 7 bn. annual proceeds from RETT in the recent years (Source: Statistisches Bundesamt)
Tax rate was 3.5 % of the purchase price in the past.
During the years 2010 - 2012, most federal states increased the tax rate to 4.5 - 5 %.
The aggregation of 95 % or more of the shares in a property owning company triggers RETT at any time.
Thus, a buyer can not purchase 100 % of property located in Germany without triggering RETT.
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COMMON STRUCTURES SPLIT LEGAL OWNERSHIP
Basic requirement for RETT avoidance strategy is therefore a share deal.
Common structures seek to avoid triggering RETT by splitting the legal ownership.
RETT is triggered if 95 % or more of the shares in the property owning company (PropCo) are held by a single
person/entity.
For the purpose of calculating such „aggregation of shares“, direct and indirect holdings are taken into
account.
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COMMON DEAL STRUCTURE (EXAMPLE)
Buyer purchases less than 94.9 % of the shares in PropCo.
The remaining 5.1 % portion remains with the seller (p‘ship) or can be sold to a third party (corporation only).
Seller
Seller/3rd party
Buyer
94.9 %
100 %
PropCo
5.1 %
PropCo
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COMMON DEALS DO NOT ALLOW 100 % PURCHASE
Aggregation of shareholdings > 95 % results in triggering RETT.
Thus, the common structures do not allow for purchase of 100 % of the property without triggering RETT.
In case of property owning partnerships, the 5.1 % portion must remain with the seller for at least 5 years.
Otherwise RETT would be triggered.
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STRUCTURING OPTION
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STRUCTURING IDEA: FUND OF FUNDS WRAPPER
Seeking a structure which allows for the purchase of 100 % of German properties without triggering RETT.
Structuring idea: fund of fund which acquires the 94.9 % as well as the 5.1 % portion of the shares.
The 94.9 % and the 5.1 % portion must be held by different legal entities which are not affiliated.
This can be obtained by selling one portion to a SICAV and the other portion to a FCP.
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Shares in PropCo are sold to a Luxembourg FCP and a Luxembourg SICAV.
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FCP and SICAV are pooled in a SICAV acting as a fund-of-funds.
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THE FUND OF FUNDS HOLDS 100 % OF PROPERTY
From the German tax perspective, the legal ownership is decisive for the RETT trigger.
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94.9 % are legally owned by the SICAV
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5.1 % are legally owned by the FCP‘s management company.
Economically, 100 % of the property is held by the fund of funds/the investors.
Fund initiator controls the investment by investment management agreements or, if properly structured, by
providing the management company.
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EXAMPLE FUND OF FUNDS WRAPPER
Seller
SICAV
100 %
100 %
100 %
PropCo
FCP
SICAV
ManCo
5.1 %
legal ownership
94.9 %
PropCo
German property
German property
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CONTACT
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Dr. Carsten Bödecker
Harald Kuhn
Partner . Steuerberater . Rechtsanwalt
Partner . Rechtsanwalt
Nordstr. 116-118 | 40477 Düsseldorf
Nordstr. 116-118 | 40477 Düsseldorf
Tel. +49 (0) 211 946 847 - 51
Fax +49 (0) 211 946 847 - 01
Tel. +49 (0) 211 946 847 - 54
Fax +49 (0) 211 946 847 - 01
[email protected]
www.bepartners.pro
[email protected]
www.bepartners.pro
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DISCLAIMER
Although every effort has been made to offer current and correct information, our publications have been prepared to give general guidance only. They cannot substitute individual tax
or legal advice and they will not be updated. Our publications are distributed with the understanding that Bödecker Ernst & Partner, the editors and authors cannot be held responsible
for the results of any actions taken on the basis of information contained therein or omitted, nor for any errors or omissions in this regard.
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german real estate transfer tax

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