Family property companies in the legal form of a partnership (e.g. GbR or KG) are a popular structuring instrument for passing on assets to the next generation. In this context, properties that were previously owned directly by a family member are often transferred to a partnership; other family members then acquire shares in the partnership. From a real estate transfer tax perspective, the following must be taken into account, particularly with regard to the assets of the partnership: The transfer of a domestic property previously directly owned by a partner to a partnership leads to a change of legal entity under civil law, which is generally suitable for triggering real estate transfer tax.
However, if a property is transferred from a sole owner to a joint owner, the tax is exceptionally not levied on the proportion of the assets of the joint owner held by the seller, Section 5 (2) GrEStG. The term „Gesamthand“ includes all partnerships such as GbR and KG.
However, the tax exemption under Section 5 (1) and (2) GrEStG is cancelled to the extent that the transferor’s share in the assets of the joint ownership (GbR, KG) is reduced within ten years of the transfer of the respective property, Section 5 (3) GrEStG. This regulation is an anti-abuse provision that aims to prevent the property from being indirectly transferred to a third party free of real estate transfer tax „shortly“ after the contribution by way of the transfer of company shares.
However, the principles outlined above previously only applied until 31 December 2026! The reason for this legal situation, which was initially limited in time, was based on the fact that, with the entry into force of the so-called MoPeG (Act on the Modernisation of Partnership Law) on 1 January 2024, partnerships are no longer to be regarded as joint and several partnerships but, like corporations, as companies with legal capacity with their own corporate assets. The resulting loss of tax transparency for partnerships was restored for the areas of income tax and inheritance and gift tax law by means of a corresponding statutory regulation, but not for real estate transfer tax.
For this area of law, there is currently only a transitional regulation that lasts until 31 December 2026, according to which partnerships with legal capacity are (still) considered joint ownership and their assets (still) considered joint assets for the purposes of real estate transfer tax and are therefore also transparent for real estate transfer tax purposes. The transitional period will end on 1 January 2027, although it has not yet been determined what should apply after this date. Without a binding new regulation, there is a risk of a so-called passive holding period violation, according to which the transfer of a property to the partnership retroactively (!) to 1 January 2024 (entry into force of the MoPeG) would be assessed as a change of legal entity relevant for real estate transfer tax purposes solely due to the expiry of the transitional regulation and real estate transfer tax would subsequently have to be assessed on the value of the property transferred to the partnership.
The legislator intends to defuse this legal situation by now expressly stipulating that in the circumstances described above and realised by 31 December 2026, the entry into force of the MoPeG alone does not lead to a breach of current retention periods.
The regulation is to enter into force on the day after its promulgation.