A German tax problem: Double assessment of real estate transfer tax for the acquisition of company shares

Signing and closing: tax challenges in real estate and share transfers

The distinction between signing and closing plays a key role in real estate transactions and share transfers. While signing marks the moment when the contract is signed and the essential terms of the contract are agreed, closing is when the actual transfer of the subject matter of the contract (such as real estate or a company share) takes place. However, this time lag entails tax risks in Germany, particularly in relation to real estate transfer tax – Grunderwerbsteuer (GrESt).

Germany’s Real Estate Transfer Tax Act  – Grunderwerbsteuergesetz (GrEStG) – and the problem of signing and closing

A major challenge is that real estate transfer tax can be triggered at the time of signing if a taxable event occurs (e.g. the obligation to transfer a property). This can lead to a time discrepancy where the tax liability arises even though the economic transfer of ownership (closing) is still pending. This advance tax obligation often represents a financial burden for taxpayers.

Special features of share deals

This issue is particularly relevant in the case of so-called share deals. In this case, shares in companies that own real estate are transferred. If a certain threshold is exceeded at the time of signing – such as the 90% limit for corporations – the real estate transfer tax liability may already be triggered even though the closing has not yet taken place. This early tax trigger puts many parties under unexpected financial pressure.

Conditions precedent and tax risks

To get around this problem, conditions precedent are often used in contracts. These are intended to delay the point in time at which a taxable event occurs. Nevertheless, in practice, real estate transfer tax is often assessed at the time when the condition actually occurs, which can lead to additional complications. Taxpayers are therefore faced with the challenge of thoroughly examining the tax risks, especially when there is a time lag between signing and closing.

The German Federal Fiscal Court (BFH) ruling of 09 July 2025

In a ruling on 09 July 2025, the Federal Fiscal Court (BFH) commented on a central aspect of this issue. The question was whether real estate transfer tax can be assessed twice in the event of a time lag between signing and closing – once on the basis of the agreement (signing), and again after the actual transfer (closing). The BFH was sceptical of the practice advocated by the tax authorities to consider the transaction on a specific date. It ruled that double taxation contradicts the substantive legal principle of priority in Section 1 (3) of the GrEStG, and is therefore legally questionable.

Conclusion

The tax treatment of property transactions with a time lag between signing and closing requires particular care. The latest BFH ruling could possibly lead to a realignment of administrative practice in order to avoid double taxation. Nevertheless, it remains essential to identify potential tax liabilities at an early stage in order to minimise financial risks.

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Philip Goll is a partner at Pfeiffer Link PartG mbB Steuerberatungsgesellschaft . He is a German tax advisor and public auditor. He specialises in international taxation, corporate restructuring and real estate transfer taxation. He lectures on the topic of real estate transfer taxation at his alma mater Ludwigshafen University of Business and Society.