- Due diligence costs for the purchase of real estate
- Costs associated with a contract for purchase of real estate and registering title
- Tax or duty on the acquisition of shares in a company owning real estate
- Capital gain taxation on future disposal of real estate or shares in a company owning real estate
jurisdiction
1. Due diligence costs for the purchase of real estate
1.1 Municipal search
Cost
Administrative fees for copies or excerpts from public registers may vary regionally from EUR 10 to EUR 50 (per land parcel).
VAT
Nil
1.2 Utility search (each service)
Cost
Variable: approx. EUR 10,000 for office buildings depending on scope.
VAT
Nil
1.3 Land registry search (per search)
VAT
Nil
1.4 Company search, per company
VAT
19%
1.5 Survey/Valuation fee, approx
VAT
19%
1.6 Phase 1 Environmental survey
VAT
19%
2. Costs associated with a contract for purchase of real estate and registering title
2.1 VAT on price
Cost
The amount of the real estate transfer tax depends on the federal state where the property is situated. The tax rate is in between 3,5% and 6,5% of the consideration paid by the purchaser.
VAT
19%
2.2 Transfer duty
3. Tax or duty on the acquisition of shares in a company owning real estate
If 90 % or more of the shares or partnership interest in a German or foreign corporate entity or partnership is acquired by one purchaser or a group of companies qualifying as a so-called RETT-group owning German real estate RETT will be triggered.
In addition, the transfer of 90 % or more of the interest in a German or foreign partnership within a period of 10 years will trigger RETT. The direct or indirect transfer of 90 % or more of the shares in a German or foreign corporate entity within a period of 10 years to new shareholders will also trigger RETT.
An exemption is made for transfers of shares in companies listed on a stock exchange in the European Union or the European Economic Zone or a stock exchange notified as equivalent by the European Commission to the extent the transfers were executed on such stock exchange.
4. Capital gain taxation on future disposal of real estate or shares in a company owning real estate
4.1 Tax on capital gains on the disposal of the real estate itself
Such capital gains are treated as part of the taxable income of the individual or corporation.
Individuals: income tax up to a maximum of 47.475% (including solidarity surcharge); tax exempt e.g. if disposal occurs after more than ten years after acquisition.
Corporations: general corporate tax of 15.825% (including solidarity surcharge) and in addition, unless a certain trade tax exemption applies, also trade tax (approx. 14%–17%)
4.2 Tax on capital gains on the disposal of shares in a company owning real estate
Such capital gains are treated as part of the taxable income considering the following:
- If the shares are held by a company in the legal form of a corporation, only 5% of the capital gains are part of the taxable income of the company;
- If shares in a property company in the legal form of a corporation are sold by an individual holding at least 1% of the share capital, 60% of the capital gains are part of the taxable income of such individual;
- If shares in a property company in the legal form of a corporation are sold by an individual holding less than 1% of the share capital, a flat tax rate of 26.375% (including solidarity surcharge) applies irrespective of the holding period;
- In case of foreign shareholders exemptions under double tax treaties or domestic tax law for limited taxpayers may apply.
