In principle, the calculation of the property tax as of 1 January 2025 is based on a so-called federal model (Bundesmodell) which is based on the standard earnings value method (typisiertes Ertragswertverfahren) - for example, for residential rental properties and condominiums - and the standard substance value method (typisiertes Sachwertverfahren), for example, for commercial properties and part-ownership. However, tax treaties may exclude foreign-source income from German taxation. Savills. In other words, we have the largest real estate team in Germany and sufficient capacities to cope with large-volume transactions, no matter how tight the deadlines. Note: With effect for fiscal years starting 2022 onwards, the German legislator has further created the possibility for partnerships to be treated as corporations for tax purposes. Trade tax is levied by the local authorities typically at rates between 14% and 17%, although in some cities it can be as high as 19%. Input VAT relating to construction and refurbishment services (and other services) of real estate is generally subject to a ten year correction period (capital goods scheme). Available: https://www.statista.com/statistics/1187874/germany-real-estate-transaction-volume/, Yearly real estate transaction volume in Germany from November 2018 to October 2020, by sector, Immediate access to statistics, forecasts & reports, Residential buildings - building permits index development Germany 2008-2021, Residential buildings with multiple dwellings - permits index Germany 2008-2021, Residential buildings - building permits rate of change Germany 2008-2021, Buildings with multiple dwellings - building permits change rate Germany 2008-2021, Germany: house price index Q1 2016-Q2 2022, Transaction price for the purchase of new dwellings in German cities 2016-2021, Gross residential mortgage lending in Germany Q2 2014-Q3 2022, Germany: housing conditions by dwelling type 2015-2021, Prime rent of office real estate in Munich 2013-2022, Prime rent of office real estate in Berlin in 2013-2022, Prime rent of office real estate in Hamburg 2013-2022, Prime rent of office real estate in Frankfurt 2013-2022, Prime office yields in Germany Q2 2022, by city, Vacancy rate of office real estate in Frankfurt 2013-2022, Vacancy rate: office real estate in Berlin 2013-2022, Vacancy rate: office real estate in Munich 2013 to 2022, Share of logistics real estate investments in Germany H1 2022, by buyer group, Rent costs in leading logistics markets in Germany H1 2019 - H1 2022, by city, Take-up rate for warehouses in the logistics market in Germany 2014-2022, Take up of logistic real estate in Germany H1 2020 - H1 2022, by region, Distribution of take up of logistic real estate in Germany 2019-2022, by sector, Net prime yields for warehouses over 5,000 square meters Germany 2014-2022, by city, Number of shopping centers in Germany 1965-2023, Retail space of shopping centers in Germany 1965-2023, Take-up of retail property Germany Q4 2019-Q2 2022, Letting of retail property Germany 2022, by city, Share of retail real estate investments in Germany 2021-2022, Retail space transaction volume Germany Q1-Q3 2022, by property type, Prime monthly high street retail property rents in Germany Q2 2022, by city, Volume of PPI payments India FY 2014-2019, by type, Alternative finance transaction volume per capita in Europe 2020, by country, Warehousing transaction volume in Ahmedabad in India FY 2018-2022, Warehousing transaction volume in the Delhi NCR in India FY 2018-2022, Transaction volume of office properties in Hyderabad India 2016-2021, London (UK) property market: purchase transaction numbers between Q1 2011 and Q1 2014, Transaction volume of office properties in Mumbai metropolitan region India 2016-2021, Transaction volume of office properties in Pune India 2016-2021, Transaction volume of office properties in Ahmedabad India 2016-2021, Transaction volume of office properties in Bengaluru India 2016-2022, Transaction volume of office properties in Chennai India 2016-2021, Yearly real estate transaction volume in Germany from November 2018 to October 2020, by sector (in million euros), Find your information in our database containing over 20,000 reports. This situation has led many investors to wait and see. As a general rule, the sale of German real estate is VAT exempt. Get quick analyses with our professional research service. Under the new provision, its 95% threshold has been lowered to 90%, too. Both the statutory seat established in accordance with the corporate articles and the actual seat of management must be in Germany. Cookies help us to provide you with the best experience possible. DTTL and each of its member firms are legally separate and independent entities. A paid subscription is required for full access. The German real estate market - outlook for 2023 Away from prime locations, including in the Big 6 cities, the maximum range is more like 4.75% - 5.25%. Vacant or risky older properties and buildings outside prime locations are impacted even more by the price correction because prices are being discounted to take account of increased and, in some cases, disproportionate safety margins reflecting location quality and the anticipated ESG measures in relation to buildings. Nonresident companies are taxed on certain German-source income only, such as income from a German permanent establishment (PE) or rental income from German-situs real estate. If the corporation holds at least 15% of shares of the distributing corporation since the beginning of the fiscal years, dividends are also effectively 95% trade tax exempted. Learn more about how Statista can support your business. We recommend that you use an up-to-date browser to increase your security and to be able to use all the functions of the RSM website. Financing is also considerably more difficult. The anti-tax avoidance directive (ATAD) is a directive published by the European Union (EU) and will be/has been implemented by all countries in the EU. For partnerships, the principle of the protection of legitimate expectations applies, if the previous five-year period has already expired by July 1, 2021. As part of individual country chapters, the legal basis for real estate law, the types and nature of ownership rights as well as other rights in rem, the registered system, approval and notarization requirements as well as the role of notaries public are depicted. 2a GrEStG) only applies to partnerships, i.e. For certain transactions both provisions might apply. 2a GrEStG does not apply to corporations. In, Savills. System of indicators for the German residential property market Our expertise covers all types of real estate from offices, apartments and retail premises through to special buildings such as hotels, shopping centres, logistics facilities and nursing homes, etc. No solidarity surcharge is due on income tax up to 17,543 ( 35,086 for married couples). Therefore, many sellers would find themselves selling at a loss. Then you can access your favorite statistics via the star in the header. The 12 month rolling value of residential property investment transactions in Germany peaked in January 2022. In the past, it was possible not to trigger Section 1 para. In the case of a change in the structure of partners in the partnership, real estate transfer tax was previously triggered if there was a direct or indirect change in partners of at least 95% within a period of five years. This gap cannot simply be closed by market players reaching new conclusions within the next six months. When seeking finance, more than ever before, investors are having to address a broad range of financiers in order to gauge the best possible terms. As in the past, investors with strong equity backing will primarily seek Core properties. Trade tax is based on taxable income as calculated for corporate or individual income (business income) tax purposes with some modifications (e.g. Show sources information As well as benefiting from increased transaction certainty, they can also pay higher prices than buyers financed by loan capital, since the latter run the risk of negative leverage above a certain price. Germany Real Estate: Commercial Property Deals Tumble 50% to Five-Year Thereafter, the topics that are of particular relevance for transactions, namely representations and warranties and liability regime as well as the creation of collateral/mortgages, etc. Unlike Section 1 para. on non residential (commercial) buildings). Seeterms of usefor more information. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (DTTL), its network of member firms, and their related entities. She completed her training as a Legal and Notary A More, Felix is a German qualified attorney-at-law (Rechtsanwalt) and Corporate/M&A practitioner who joined Deloitte Legal Germany in 1999, to be admitted to the firms partnership in 2006. Value added tax (VAT) is levied on supplies of goods and services at each stage of the production and distribution chain. The planning and implementation of real estate projects in foreign countries requires a detailed analysis of the legal parameters for the construction and usage of real estate prevalent in the respective jurisdiction. . Diese Cookies enthalten keine personenbezogenen Daten, insbesondere nicht Ihre IP-Adresse. Hamburg's commercial real estate transaction volume was around EUR 450 million in H1 2023. Directly accessible data for 170 industries from 150+ countries German commercial real estate investment market | Germany | Cushman The chances of this are outweighed by the risks that it could further fuel inflation in the short term, such as the strong US labour market and the Biden governments stimulus package of over $1.9 trillion. Every type of real estate, including undeveloped land, is subject to property tax. 2c GrEStG contains a so-called stock exchange clause. Real estate market in Germany - statistics & facts | Statista Quick overview of German real estate - RSM He is certified lawyer in construction an architects law. This means that the widely known co-investor models, in which a main investor acquired the shares just below the shareholding threshold and a co-investor simultaneously acquired the remaining shares (club deals), are now excluded. Appointment and retirement of a limited partner must be reported to the Commercial Register. 6 GrEStG is also not applicable to the two provisions, the question arises as to whether real estate transfer tax could technically be triggered several times by the same transaction. For the calculation of the property taxes, so far, the following three factors have to be taken into account: Unit value (Einheitswert) X property tax measurement number (Grundsteuermesszahl) X assessment rate (Hebesatz). "Value of Residential Property Investment Transactions 12 Month Rolling in Germany from January 2014 to November 2022 (in Billion Euros). Handbook for Real Estate Transactions | Deloitte Legal Germany and over 1Mio. If the triggering of real estate transfer tax cannot be avoided anyway, it could be an option for the purchaser to perform a simpler asset deal without having to carry out a (usually more extensive) due diligence for the share deal, and without having to buy in legal risks entailed in a share deal. Oceans & Company recruits the experienced Corporate and Investment banker Lars-K. Schlomberg to expand its Real Estate Finance Division. only 80% let subject to VAT and 20% let VAT exempt) the initial input VAT deduction has to be corrected (subject to various provisions (including some de minimis thresholds)). 3 GrEStG), however, applies not only to partnerships but also to corporations. Under the reverse charge mechanism, the liability to pay VAT to the tax authority switches to the buyer and may simultaneously be offset as input VAT if and to the extent that the buyer plans to use the piece of real estate for activities that are not VAT exempt. The ECB is talking of an end to the increases by the summer. A fundamental distinction must be made between open and closed real estate funds. Available: https://www.statista.com/statistics/1005803/value-of-residential-property-investment-transactions-in-germany/, Value of residential property investment transactions 12 month rolling in Germany from January 2014 to November 2022, Immediate access to statistics, forecasts & reports, Population in Germany 2016-2022, by housing situation, Living situations in Germany 2022, by age group, Home ownership rate with a mortgage in Germany 2010-2021, Non-financial assets: dwellings of households per capita Germany 1996-2020, Prime multifamily real estate yield in Europe 2022, by city, Vacancy rate development on the housing market Germany 2001-2021, Largest public residential real estate companies Germany 2020, by units owned, Value of 12 month rolling residential property investment in Germany 2014 to 2022, Breakdown of residential real estate investments in Germany 2019-2022, Breakdown of residential real estate investments in Germany 2018-2022, Breakdown of residential real estate investments in Germany 2019-2022, by buyer group, Breakdown of residential real estate investments in Germany 2020-2022, by origin, Residential buildings - building permits index development Germany 2008-2021, Residential buildings with multiple dwellings - permits index Germany 2008-2021, Residential buildings - building permits rate of change Germany 2008-2021, Buildings with multiple dwellings - building permits change rate Germany 2008-2021, Germany: house price index Q1 2016-Q2 2022, Quarterly house price to income ratio in Germany 2012-2022, Transaction price for the purchase of new dwellings in German cities 2016-2021, Average sales price of apartments in Germany 2012-2022, by city, Annual house price change in Germany 2006-2022, per quarter, Residential mortgage debt in Germany Q1 2010-Q3 2022, Outstanding residential mortgage lending in Germany Q2 2014-Q3 2022, Gross residential mortgage lending in Germany Q2 2014-Q3 2022, Gross residential mortgage lending in Germany 2015-2022, by mortgage type, Quarterly house price to rent ratio in Germany 2015-2022, Rental index development Germany 1995-2022, Average rent price of residential property in Germany 2004-2022, Average apartment rent in selected districts in Munich, Germany 2021, Number of residential property investment transactions in Germany Q1 2017-Q4 2018, Real estate transaction volume in the U.S. 2007-2010, Volume of second-hand free housing transactions by Spanish region 2015, Number of transactions of the investment real estate market in Kuwait 2015-2018, Average transaction value of the real estate market in Kuwait 2015-2018, Number of transactions of the commercial real estate market in Kuwait 2015-2018, Average transaction value of the real estate market in Kuwait 2018, by sub-sector, Number of transactions of the real estate market in Kuwait 2018, by sub-sector, Number of transactions of the residential real estate market in Kuwait 2015-2018, Average transaction value of the residential real estate market in Kuwait 2015-2018, Number of transactions of the real estate market in Kuwait 2015-2018, Average transaction value of the investment real estate market in Kuwait 2015-2018, Average transaction value of the commercial real estate market in Kuwait 2015-2018, Completed investments into residential housing in China 2008-2021, Industry revenue of other activities related to real estate in California 2012-2024, Industry revenue of lessors of real estate in Georgia 2012-2024, Value of residential property investment transactions 12 month rolling in Germany from January 2014 to November 2022 (in billion euros), Find your information in our database containing over 20,000 reports. Regulations for management and representation are defined in the Articles of Association. The network is not itself a separate legal entity of any description in any jurisdiction. In addition, the reform results in increased declaration and monitoring obligations for corporations owning domestic real estate. Facebook: quarterly number of MAU (monthly active users) worldwide 2008-2023, Quarterly smartphone market share worldwide by vendor 2009-2023, Number of apps available in leading app stores Q3 2022, Profit from additional features with an Employee Account. also a distribution to any number of new partners triggers real estate transfer tax without one of them having to hold a certain minimum participation. For a further ten years, there must not be an (indirect) change in the structure of shareholders of more than 90%. The GmbH & Co. KG usually operates as a commercial entity. Failure to obtain such certification triggers penalties in different degrees of severity at the level of both the shareholders and the REIT, starting from penalty payments up to a potential loss of the REIT status. We offer comprehensive advice for all types of real estate transactions, asset deals, share deals, sale-and-leaseback transactions, and for the acquisition or sale of large-volume portfolios and complex non-performing loans. 2a GrEStG is to be applied with priority. The regulations regarding the profit distribution (e.g. These investors will base their pricing on the returns that can be achieved from other asset classes, especially equities and bonds. Retained earnings distributions of corporations, such as dividends, are subject to withholding tax at a uniform rate of 26.375% including surcharge tax. Open investment funds are generally taxed in accordance with the provisions of the German lnvestment Tax Act (lnvStG). However, the German tax law offers the possibility under certain conditions to transfer the respective capital gains to an acquired (or erected) replacement asset resulting in a deferral of the taxation of the respective built-in gains in the disposed real property. As soon as this statistic is updated, you will immediately be notified via e-mail. The trick is finding the optimal arrangement in terms of tax law and an appropriate balance between the different interests within the joint venture structure. High street retail real estate. Dr Katja Schwenzfeier is Deloitte Global Leader, Deloitte Legal Real Estate Law and leader of the Deloitte Legal Service Line Real Estate in Germany. Accessed July 18, 2023. https://www.statista.com/statistics/1187874/germany-real-estate-transaction-volume/, Savills. In the press area, you will find press releases, speeches, guest contributions and interviews with Bundesbank Executive Board members as well as further press materials. Einige der von uns gesetzten Cookies dienen dazu, bestimmte Funktionen unserer Webseiten zu ermglichen, insbesondere zur Steuerung des Cookie-Banners (damit dieses bei Ihren erneuten Besuchen nicht immer wieder angezeigt wird). Seen against the backdrop of the strong first quarter, which accounted for some EUR 24 billion, the average for Quarters 2 - 4 was only around EUR 14 billion per quarter. In 2023, the credo for financing will be to get the one finance deal, and not as in previous years to negotiate the best deal out of various options after the decimal point. This also applies to dividends and capital gains when the underlying assets qualify as business assets. Show sources information Even if a taxpayer's activities are, in principle, regarded as business income and liable for trade tax, trade tax may be avoided under the following conditions. As a Premium user you get access to the detailed source references and background information about this statistic. . While a certain level of structuring potential will remain in the case of real estate transactions, it is not unlikely that the real estate transfer tax becomes a real corporate tax even for companies outside the real estate sector.