Signing and closing in the case of real estate transfer tax - New ruling by the Federal Fiscal court creates momentum
In the case of share transfers to property-owning companies, the question of whether both a contractually agreed transaction imposing a legal obligation (signing) as well as a transfer in rem (closing) can each independently trigger real estate transfer tax (RETT) has occupied practitioners and legal experts for years. Three recent rulings by the Federal Fiscal court (Bundesfinanzhof, BFH) are now bringing about considerable momentum on this issue that poses a core problem for M&A transactions.
The problem of double assessments for tax
In the case of share purchase agreements for company shares in a GmbH [German limited liability company] there is usually a time lag between the signing and the closing. The signing establishes the contractual claim for the transfer of shares and can fulfil the elements of Section 1(3) no. 1 or no. 3 of the Real Estate Transfer Tax Act (Grunderwerbsteuergesetz, GrEStG). The closing - the actual assignment of shares - fulfils the elements of Section 1(2b) GrEStG once the 90% threshold has been breached. Moreover, up to now, the fiscal administration was of the view that both transactions were taxable independently of each other unless they occurred at the same time. The introductory sentence of Section 1(3) GrEStG (“if taxation pursuant to paragraphs 2a and 2b would not be possible”) applies solely in the case of simultaneous implementation.
An overview of three new BFH rulings
In its ruling of 9.7.2025 (case reference: II B 13/25), for the first time, the BFH expressed considerable doubts about the double assessment for tax and asked whether an assessment pursuant to Section 1(3) no. 1 GrEStG is permissible if, when the assessment notice is issued, the local tax office already knows that the closing has taken place in the meanwhile. In the opinion of the Munich-based BFH judges, the regulation for making adjustments under Section 16(4a) no. 5 GrEStG and its relationship to the subsidiarity proviso under Section 1(3) GrEStG need further clarification.
Shortly thereafter, in a ruling of 16.9.2025 (case reference: II B 23/25), it was specified that under Section 1(2b) GrEStG the taxation of the closing is not in itself doubtful. The doubts relate exclusively to the additional assessment for the signing. In practical terms, this means that there is little prospect of a suspension of the enforcement of the closing assessment notice, although this would be the case for the signing assessment notice.
And finally, in a ruling of 27.10.2025 (case reference: II B 47/25) – which was published in the Federal Tax Gazette (Bundessteuerblatt) and thus has to be applied by the fiscal administration - the serious doubts were reaffirmed. The BFH clarified that the subsidiarity proviso under Section 1(3) GrEStG could also apply even if there is a time lag between signing and closing.
Legislative response
The legislators have recognised the problem and have already taken action. The 9th Act Amending the Tax Consultancy Act (which was published on 2.7.2026 in the Federal Law Gazette (Bundesgesetzblatt, BGBl) and has therefore come into force) provides that, in the future, the signing will trigger the final assessment for tax if the shares are transferred in fulfilment of this contract at the closing. The closing will then no longer constitute an additional taxable event. Furthermore the requirement to file two separate reports has been eliminated - only the signing still has to be reported.
