The transfer of property isÂ subject to GermanÂ Real Estate Transfer Tax.
Hereby the hight of the transfer tax is between 3,5% and 5% (Berlin) depending on the federal state.
To avoid German real estate transfer tax it was practice to sell shares of a company owning the property (so called share-deal) instead of selling the property it self (so called asset-deal).
Now Germany put a new law (effective on June 7, 2013) to prevent this miss-use and make the German federal tax law more fair.
Here is how the so calledÂ RETT-Blockers (RETT stands forÂ Real Estate Transfer Tax)Â used to work:
Not the property would be transferred but 94% and 6% shares of a company owning the property.
The transfer of shares in real estate-owning companies is in generalÂ subject to German Real Estate Transfer Tax if at least 95%Â of the shares in the company are accumulated or at least 95%Â of the shares are transferred to new shareholders.
To circumvent this it was use to transfer only 94% of the shares to the new owner and the rest of 6% either stayed with the old owner or were transfer to another entity not equal to the 94% shareholder. However the 6% entity could be owned by the 94% company trough a holding structure.