On July 1, 2025, far-reaching changes to the Real Estate Transfer Tax Act (GrEStG) came into force. We already reported on the specific changes to the GrEStG in June 2025 (see our blog post: LINK). Share deals, i.e., transfers of shares in real estate companies, are particularly affected by the legal changes. Companies must prepare for a significant additional tax burden, limited structuring options, and increased audit requirements.

Key points of the legislative reform

Lowering of the participation threshold

With the reform, the legislator aimed to put share deals on an equal footing with asset deals. This is the legislator's response to previous circumvention schemes and structural inequalities. The core of the reform is the reduction of the participation threshold for taxable share consolidations from 95% to 75%. At the same time, the observation period is being extended from 5 to 7 years.

Focus: Real estate companies

The term "real estate company" has also been defined by law for the first time: According to the legal definition, a company is considered a real estate company if its main focus is on the sale, management, or leasing of real estate or if the company is predominantly used for these purposes. These are typically special purpose vehicles (SPVs) that develop and sell real estate. Whether a company is actually a real estate company can be quite controversial in individual cases, as the law does not specify exactly when such "predominant" use exists.

Another new feature is the inclusion of associations of persons with uniform management or controlling influence and the consideration of indirect shareholdings. This significantly expands the scope of transactions subject to tax.

New assessment basis leads to higher tax burden

Since July 1, 2025, the assessment basis for calculating real estate transfer tax is no longer the so-called property value in accordance with the Property Value Ordinance, but the fair market value in accordance with the Valuation Act. This is often significantly higher than the previous property value and leads to a considerable additional tax burden, especially in urban regions and for high-priced real estate.

In connection with the reduction of the participation threshold to 75%, this change in the assessment basis has significant implications: Even when 75% of the shares are transferred, the tax is now calculated on the basis of the full fair market value, even though the economic value of such a shareholding is regularly lower. This leads to a significantly higher tax burden, the objective justification for which is highly questionable.

Consequences for practice and criticism

Significant increase in the tax burden for share deals

If a real estate company is now (directly or indirectly) at least 75% owned by one party, sold or reorganized, real estate transfer tax of 3.5% of the fair market value of the real estate will be payable from July 1, 2025, instead of the previous maximum of 0.5% of the real estate value.

It is critical to note that intra-group share transfers (restructuring) are also taxable if the 75% threshold is reached, even though the economic ownership structure does not change. This contradicts the basic idea of restructuring tax law, which is intended to facilitate structural adjustments, and places a considerable additional tax burden on corporate groups.

It is particularly problematic that even subsequent minor share transfers above the 75% threshold may be taxable, even if the relevant threshold had already been exceeded previously. This can lead to a disproportionate tax burden.

Legal uncertainty and practical difficulties 

The new legal provisions are not always clear and unambiguous. For example, it is unclear when a company can be considered to be "predominantly used" for the purpose of selling, leasing, or managing real estate and thus be classified as a real estate company.

The change in the basis of assessment from the easily determinable property value to the fair market value entails additional work, as in many cases an expert opinion will be required to determine the fair market value within the meaning of Section 10 of the Valuation Act (BewG).

The complexity of the new regulations also makes self-assessment potentially more difficult for party representatives. It is therefore to be feared that party representatives will increasingly opt for a tax return instead of self-assessment due to the greater effort involved and the associated legal uncertainties (and, not least, a higher liability risk).

This would in turn lead to considerable additional work for the tax authorities and probably prolong the processing time for the respective tax case.

Su​​​​​​​mmary

Numerous questions relating to the new legal provisions of the GrEStG remain unresolved in practice. It is therefore crucial for companies to review and adapt their structures in good time in order to avoid unpleasant surprises.

The new regulations make many previously permissible structuring models unattractive or obsolete. Structures that have deliberately kept shareholdings below 95% will lose their effectiveness. Fund structures, corporate groups, and institutional investors must now comprehensively review their shareholdings and reassess their tax risks.

Companies should document existing shareholding and financing chains in full, identify tax risks at an early stage, and adapt their transactions to the new framework conditions in a timely manner. Tax and legal advice is therefore essential.