Real estate transfer tax, transfer of ownership shares in a GbR
November 21, 2009 | 100,00 EUR | answered by Michael Herrmann
Persons A, B, and C are (changing) partners of a GbR. B and C are related in a straight line (mother and son). A is not related to either B or C.
In 2006, A and B acquired a property through the highest bid at a forced auction as a GbR, with A holding 90% and B holding 10% of the shares internally. B's 10% shares then passed to C in 2006, and B left the partnership. Subsequently, 80% of A's 90% shares passed to C internally, so that C ultimately held 90% of the shares. In 2009, the remaining 10% of A's shares passed to B, and B re-entered the GbR, while A left. B and C are now the only partners of the GbR.
Questions:
1. Could real estate transfer tax have been incurred due to the internal shifts of shares in the GbR? (If B is not considered a new partner after re-entering the GbR, only 90% of the shares have ultimately passed to new partners in total; -- § 1 (2a) GrEStG.)
2. If B were to now leave the GbR, resulting in the dissolution of the GbR and C becoming the sole owner of the partnership assets (property), would real estate transfer tax be incurred? (B and C are related in a straight line; -- § 3 Nr. 6 GrEStG)
Dear inquirer,
First of all, thank you for your inquiry, which I would be happy to answer based on the information provided and in the context of your initial consultation. The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Only transactions that trigger a change in legal entity, whether real or fictional, are subject to real estate transfer tax.
§ 1 para. 2a sentence 1 GrEStG determines, by means of a fiction, that a significant change in the shareholders of a partnership, to which real estate belongs, is considered a transaction aimed at the transfer of the property to a new partnership, if this change occurs within five years. The provision was created to eliminate possibilities of abusive tax exemptions. It is to be understood as another alternative or complementary provision that does not require an intention to circumvent.
The change of shareholders is subject to real estate transfer tax if at least 95% of the shares in the partnership's assets are transferred to new shareholders within five years, with inheritances not taken into account. It is clear that the provision focuses solely on the change in the partnership's shareholders, not solely on the ownership structure.
Therefore, as 90% of the shares in the partnership were transferred to a new shareholder (C), who was not involved in the original acquisition, there is no taxable acquisition transaction.
The transfer of 10% of the shares to B in 2009 also does not result in a taxable acquisition transaction, as the original partnership is not changed by more than 95%. In the end, only 90% of A's shares are transferred to C.
Regarding the sale of B to C, § 6 para. 4 GrEStG applies. § 6 GrEStG provides that the tax is not levied to the extent that the ownership of a property is transferred from a partnership to a sole owner, in the amount corresponding to their share in the partnership. These regulations also apply in the case of the dissolution of the partnership, where the agreed buyout ratio is decisive.
The tax relief is not granted if a partner, or in the case of inheritance, their predecessor, acquired their share within five years before the transfer by a legal transaction during their lifetime (blocking period). This is the case here, so C must pay tax as the sole owner for the entire acquisition in 2009.
As a last option to avoid taxation, § 3 No. 6 GrESt actually provides for this. However, it only applies to the 10% of B transferred in 2009.
To avoid taxation on the 90% of the property value, the blocking period of five years must be observed. In determining whether the shareholder acquired a share in the partnership within this period, the focus is on the real (partnership) co-ownership rights associated with acquiring the shareholder position (BFH v. 6. 6. 2001 - II R 56/00, BFH/NV 2001 p. 1670).
I hope this information gives you an initial overview of the situation and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
