rogerphoto/Depositphotos.com
Signing now takes precedence over closing on commercial 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.
Avoiding a double assessment depended on correctly notifying the tax authorities within a two-week period. Miss the deadline and both assessments could stand. Germany's Federal Fiscal Court signalled last year that it regarded this outcome as legally questionable. The new legislation finally removes that uncertainty.
What changes from 3 July
Signing now takes precedence. Once tax is triggered at signing — as it will be in any share deal involving 90% or more of a property-owning company — closing no longer creates a second taxable event. In most cases, a single notification at signing will now be sufficient.
The notification deadline has also been extended from two weeks to one month, giving transaction teams greater flexibility in larger and more complex cross-border deals.
One further change will require attention during negotiations. Property-owning companies are now jointly liable for the tax alongside the purchaser, meaning that responsibility for the liability will need to be addressed explicitly in share purchase agreements.
The legislation also brings greater certainty for partnership structures. The exemption allowing property to be transferred to, from and between partnerships without triggering real estate transfer tax had been due to expire at the end of 2026. It has now been made permanent.
The new rules apply from 3 July 2026. Completed transactions are unaffected. Where signing took place before 3 July but closing occurs afterwards, transitional provisions ensure that tax arises only once, at signing.
The amendment arrives at a time when Germany's investment market remains characterised by subdued transaction volumes, lengthy negotiations and increasingly complex financing structures. It will not change those fundamentals, nor will it narrow pricing gaps between buyers and sellers. But by removing one avoidable administrative complication, it marginally reduces the friction surrounding transactions that are already difficult enough to complete.
What still needs attention
The reform does not resolve every issue. Where several buyers are involved and no individual investor acquires 90% or more in a single step, the existing transfer rules continue to apply. Joint ventures and consortium structures therefore still require careful analysis.
Some refinancing structures, particularly those involving intermediate holding companies, also raise questions that the legislation does not fully address. Specialist tax advice will remain essential for more complex transactions.
For deal teams currently working through acquisitions, the practical implications are straightforward: identify where each transaction sits relative to the 3 July cut-off, ensure the target company's new tax liability is properly reflected in the share purchase agreement, and update internal notification procedures to reflect the extended one-month deadline.
For five years, this anomaly has complicated almost every German real estate share deal. It has now been removed. The amendment is an incremental rather than a transformative reform, but one that most investors, lenders and advisers are likely to welcome. At a time when Germany's property market faces far larger challenges, removing one unnecessary obstacle to completing transactions is a worthwhile improvement.