German law requires that any taxable event for Real Estate Transfer Tax (RETT) purposes be notified to the competent tax authority by the taxpayer. In the case of the “unification of shares” in a real estate-owning company in the hands of a single owner or a group of companies, the taxpayer is the single owner or the group of companies; such a unification constitutes a taxable and, therefore, notifiable event for RETTpurposes. In the case of a real estate-owning partnership, a 95% or more direct or indirect change in the ownership of the partnership within five years is also a taxable event. In this case, the partnership itself is the taxpayer for these purposes.
The Federal Tax Court (BFH) recently held that failure to submit the RETT notice might give rise to tax fraud (“negligent tax evasion”). In the case concerned, a GmbH contributed real estate and shares in a real estate owning subsidiary to a GmbH & Co.KG in exchange for a partnership interest. The transfer contract was notarized by a Swiss notary. A RETT provision was set up in the tax balance sheet submitted to the tax authorities responsible for corporate income tax, but the taxable events for RETT purposes were not notified to the competent tax office. The Court held that the representatives of the GmbH & Co.KG should have been in a position to recognize the obligation to submit the RETT notification. Where tax fraud exists, penalties may be assessed. Additionally, the taxpayer will be charged with monthly interest of 0.5% of the RETT liability.
