Germany has finally put to rest one of the most controversial aspects of real estate transfer tax (RETT) practice: the risk of being taxed twice on the same share deal.

On 2 July 2026, several amendments to the German Real Estate Transfer Tax Act (RETT Act) were passed, including the resolution of the German tax authorities' "signing-closing theory". This theory posed the risk of double RETT charges, once at signing and a second time at closing, on share deals involving entities holding German real estate unless the conditions for relief against a double charge were satisfied (see this earlier post).

The application of the signing-closing theory has been highly disputed. Criticism was further fuelled by a decision of the German Federal Fiscal Court on the issue of a double assessment of RETT in a share deal scenario, in which the court found it legally questionable whether RETT can be levied twice on a share deal where there is a time difference between signing and closing (see this earlier post).

What is the legislator's new solution?

The legislator addresses the issue at its root by amending the relationship between the taxable events pursuant to the unification rule (Sec. 1 (3) and (3a) RETT Act) and the partnership rule (Sec. 1 (2a) RETT Act) or the corporation rule (Sec. 1 (2b) RETT Act) respectively, thereby eliminating the statutory basis for the risk of double RETT. 

A core element of the reform is that the subsidiarity clause in the unification rule has been abolished. Instead, a new Sec. 1 (3b) RETT Act has been added, which declares the partnership rule and the corporation rule inapplicable "to the extent that" shares are transferred in fulfilment of a legal transaction which is already subject to the unification rule. As a result, share deals involving real estate holding entities are now primarily taxed at signing under the unification rule. However, this new regime does not apply retroactively to all transactions but only as of 3 July 2026 (including transactions which have been signed but have not been closed prior to 3 July 2026).

As there is now no longer the possibility of a double charge, the provisions dealing with relief against such a charge have been repealed. In addition, the period for a RETT notification has been extended from two weeks to one month.

Which other changes to the RETT Act stand out?

Further amendments extend the personal liability for RETT in share deals. Sec. 13 no. 5 RETT Act now stipulates that both the acquiror as well as the real estate holding entity are liable for RETT in case of a unification of interests under Sec. 1 (3) no. 1 and 2 RETT Act. In case of a transfer of unified interests under Sec. 1 (3) no. 3 and 4 RETT Act, RETT is owed by the parties to the transaction, i.e., transferor and acquiror, as well as the real estate holding entity. Accordingly, under the unification rule, the real estate holding entity is also liable for RETT and consequently obliged to file a corresponding RETT notification.

The reform also preserves the continued application of Sec. 24 RETT Act for partnerships, extending the exemptions under Sec. 5 and 6 RETT Act for transfers of real estate involving partnerships beyond the previously envisaged cut-off date of 31 December 2026. 

Outlook

The amendments should resolve most double RETT issues on share deals but will often result in an earlier due date for the RETT charge. However, signing and closing naturally remain relevant as separate taxable events where the real estate portfolio changes in the interim period. 

For discussion of the more fundamental point of whether German RETT law with respect to certain reorganisations is compatible with EU law see my recent post.