Two weeks ago, the supreme tax authorities of the federal states published their decrees on the application of § 1(2)(a) of the Real Estate Transfer Tax Act (Grunderwerbsteuergesetz) for changes in the shareholder partnerstructure of partnerships and § 1(2)(b) of the Real Estate Transfer Tax Act (Grunderwerbsteuergesetz) for changes in the shareholder structure of corporations. There are positive and surprising developments to report. We would like to highlight some aspects of the decrees here, in particular the new developmentsfor corporations.

With its Decree dated April 26, 2022, the German Federal Ministry of Finance revised its administrative guidelines on the disclosure requirements for foreign investments pursuant to Section 138 (2) of the German Fiscal Code. The Decree replaces the previous decrees dating back to 2018 and 2020, and is effective as of January 1, 2022. The Decree is welcomed as it contains some clarifications requested by the fund industry and its investors.

On April 21, 2022, the German Federal Ministry of Finance (Bundesfinanzministerium) published the long-awaited Circular on the treatment of repayments of share capital and equity contributions not made to the share capital by third country (non-EU) corporations. The Ministry thus recognizes the long-established case law of the German Federal Fiscal Court that a tax-neutral return of capital and repayment of share capital is also possible in the case of non-EU corporations. As a result, it should now be possible to finally settle tax proceedings that have been ongoing for years throughout Germany.