The draft is based on the former draft of the German Ministry of Finance published on 8 May 2019.
The government draft does not introduce material changes to the original ministerial draft. In summary, once enacted the new law would lead to the following changes:
- Reduction of the “equalization threshold” from 95% to 90% – real estate transfer tax (RETT) will, in future, be triggered if at least 90 % of partnership interests in a property holding partnership, or shares in a property holding corporate entity, are transferred within the applicable cooling period.
- Extension of “change of ownership rule” to corporate property entities – RETT will be triggered if 90 % or more of the shares in a property holding corporate entity (e.g., a German GmbH or Luxembourg S.à r.l.) are transferred to new shareholders within the applicable cooling period.
- Extension of the cooling period from 5 to 10 years for share deals involving either property holding partnerships or corporate entities.