Abstract
The acquisition of German real estate can result in a partial assumption of the current tax position and certain tax liabilities of the seller by the buyer. In case of a share deal, all existing tax risks and liabilities are economically acquired by the buyer. A tax due diligence is an appropriate measure to identify and manage such inherent tax risks and to evaluate potential tax structuring and optimisation options for the buyer. This section shall provide an overview of selected standard topics of tax due diligences in German real estate transactions, for both asset and share deal structures.
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Notes
- 1.
For the VAT-treatment of other standard-cases, cf. Meyer, Bernd (2015, p. 42).
- 2.
For a general qualification of certain works as construction or non-construction services, the detailed overview published by the higher tax office Frankfurt am Main is useful in practice, cf. Oberfinanzdirektion Frankfurt a.M. (2010, p. 670).
- 3.
Due to the “reverse charge procedure” for construction services, the applicable 15% construction withholding tax is often incorrectly calculated on the net amount only, since no VAT has effectively to be paid to the supplier; this is a typical aspect for a tax due diligence review.
- 4.
§ 1 (1) no. 1 GrEStG.
- 5.
The distinction between essential parts of a building and other assets is sometimes not 100% clear. For many parts of a building, indications can be derived from the published guidelines for a similar classification under the Tax Valuation Act (Bewertungsgesetz), cf. Oberste Finanzbehörden der Länder (2013, p. 734).
- 6.
Federal Tax Court, decision dated 17.05.2006, BStBl. II 2006, p. 659.
References
Fahrle, V. (2012). German taxation of real estate investments. In T. Just & W. Maennig (Eds.), Understanding German real estate markets (2nd ed., pp. 161–180). Cham: Springer.
Meyer, B. (2015). Immobilien und Geschäftsveräußerung, Der Umsatz-Steuer-Berater (pp. 42–48).
Oberfinanzdirektion Frankfurt a.M. (2010). Steuerschuldnerschaft des Leistungsempfängers bei Bauleistungen, Umsatzsteuerrundschau (UR) (pp. 670–673).
Oberste Finanzbehörden der Länder. (2013). Gleichlautende Erlasse der obersten Finanzbehörden der Länder zur Abgrenzung des Grundvermögens von den Betriebsvorrichtungen, 5 June 2013, Bundesteuerblatt I (BStBl I) (pp. 734–759).
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Nobiling, J., Hoyer, S. (2018). Tax Due Diligence in Real Estate Transactions. In: Just, T., Stapenhorst, H. (eds) Real Estate Due Diligence. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-319-62510-2_3
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DOI: https://doi.org/10.1007/978-3-319-62510-2_3
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