Let us meet each other from the HEART, for common economic success, leaving hateful racism and fanatical religions behind!
Our guidance doesn't replace professional legal or tax advice. Consult a specialist for comprehensive assistance
(e.g., a lawyer or tax consultant). Although we strive for accuracy, occasional errors may occur. Thank you.
FOREIGN REAL ESTATE INVESTMENTS IN GERMANY
The legal framework for foreign investors looking to invest in real estate in Germany is relatively investor-friendly. Germany does not impose significant restrictions on foreign capital in the real estate sector. However, there are several legal and tax considerations that should be taken into account:
- General Legal Framework
- No Restrictions for Foreign Investors:
- Foreigners, including non-EU citizens, can purchase real estate in Germany without any restrictions. There are no specific permits or limitations for foreign investors, whether for residential or commercial properties.
- Land Registry Law:
- The acquisition of real estate must be registered in the land registry (Grundbuch). The buyer is only recognized as the lawful owner once the registration is completed.
- Property Ownership Protection:
- German law provides strong protection for property owners. Expropriation is only possible in exceptional cases, such as in the public interest, and only with adequate compensation.
How a SHARE DEAL works in Germany in 2025
A "Share Deal" in real estate transactions in Germany refers to a specific model where, instead of buying the property directly, the buyer acquires shares in the company that owns the property. This company is usually a limited liability company (GmbH) or another legal entity.
A "Share Deal" in real estate transactions in Germany refers to a specific model where, instead of buying the property directly, the buyer acquires shares in the company that owns the property. This company is usually a limited liability company (GmbH) or another legal entity.
How a Share Deal Works:
1. Structure: The property is held by a company. The transaction involves the sale of the company's shares rather than the property itself.
2. Purchase: The buyer acquires the shares of the company that owns the property.
3. Ownership Transfer: The legal ownership of the property remains with the company, and only the ownership of the company changes hands.
Advantages of a Share Deal:
1. Avoidance of Real Estate Transfer Tax:
- If less than 90% of the company's shares are acquired in a single transaction, real estate transfer tax (Grunderwerbsteuer) does not apply. The remaining shares can be acquired later, subject to specific timeframes.
- Since 2021, the threshold for tax exemption in share deals is 90% (previously 95%), and the holding period has been extended to 10 years.
2. Tax Benefits: Depending on the structure, share deals can provide further tax advantages, particularly for larger property portfolios.
3. Flexibility: Share deals can be easier to structure for both buyers and sellers, especially for international investors.
GET IN TOUCH
