ECJ Advocate-General Says Sec. 6a German Real Estate Transfer Tax Act Does Not Constitute Illegal State Aid

In this Advisory, Dr. Martin Weger and Nils Kürten discuss the  European Court of Justice (ECJ) Advocate-General's most recent opinion regarding the conformity of Sec. 6a of the German Real Estate Transfer Tax (RETT) Act (Grunderwerbsteuergesetz) with European Union law—ECJ case C-374/17. Pursuant to Sec. 6a, specific intragroup reorganizations—such as mergers, spin-offs and split-offs of companies, and within groups owning real estate—may be exempt from RETT. This provision has a major practical impact on restructurings given RETT rates of up to six percent of the assessment basis. Due to this beneficial treatment of companies and groups owning real estate, the question arose of whether the RETT exemption concerning conversions in Sec. 6a constitutes illegal state aid. In 2017, the Federal Fiscal Court referred a case concerning this question to the ECJ for a preliminary ruling, and on September 19, 2018, the ECJ Advocate-General issued his opinion in the matter (C-374/17).

» Read the full Advisory (available only in German).