The ECJ judgement on real estate transfer tax and its significance to Germany

The ECJ decision on RETT

In its judgement of 4 June 2026, in the Nova Iberomoldes case (C-837/24), the ECJ decided that Portugal should not have levied RETT in a particular case.

This concerned a corporate restructuring in which not the property itself was transferred but only shares in a company holding real estate. The transaction in question was therefore a standard share deal.

The ECJ considered that indirect taxes like RETT may not be levied on such transactions, if they can be considered as restructuring that is protected under European law. This is determined by Directive 2008/7/EC (the “Capital Duty Directive”), which privileges certain restructuring operations for tax purposes.

The ECJ has thereby clarified that Member States must observe the restrictions of European law when taxing corporate transactions. In particular, taxation may not result in restructurings that are economically comparable being treated differently or measures that are protected under European law being made practically more difficult.

This decision is therefore of fundamental importance beyond the individual case. It particularly concerns scenarios in which tax burdens are not connected to a direct transfer of property but to corporate changes among shareholders.

Why the ECJ judgement could also be relevant to Germany

German RETT law also covers similar scenarios. RETT can be levied here, too, without property being transferred in the civil law sense.

This particularly applies to:

• the consolidation of shares by one owner
• an extensive change of shareholders at property holding companies
• certain restructuring features 
  (section 1(2a), (2b), (3) and (3a) of the RETT Act [GrEStG]).

These provisions apply to corporate transactions and create a notional property transfer, although transfer under civil law does not take place. It was precisely this legislative construction that the ECJ critiqued in the case involving Portugal.

In light of this, the question arises whether and to what extent the German provisions can be reconciled with the Capital Duty Directive. Although the details of the forms of the national provisions vary, their structures are still comparable. It is particularly relevant in practice that the decision provides taxpayers with potential arguments. Particularly in cases in which restructurings could fall under the protection mechanisms of the EU Directive, it opens up additional legal room to manoeuvre.

The differentiation between a taxable transfer of property and a non-taxable corporate action thereby becomes more important.

The current situation concerning RETT in Germany

The Federal Fiscal Court (BFH) has already considered this topic and only recently declared the German provisions on RETT to be in conformity with European law (judgement of 25 September 2024, II R 36/21). The Federal Fiscal Court does not currently consider it necessary to submit this to the ECJ.

However, similar cases are currently pending at the Federal Fiscal Court, including II R 8/23. In these cases, admissibility under European law is being reviewed again.

This ECJ judgement will most probably bring more impetus to the discussion. It increases the pressure to critically examine the existing rules  once more and to consider submitting them to the ECJ if necessary.

So although the legal situation in Germany has been decided at the supreme court level, it is not yet conclusively established. This means that taxpayers face a period of increased legal uncertainty, but it also gives them strategic room for manoeuvre. For ongoing cases or future transactions in particular it may make sense to consider the European law dimension and to check what the appropriate steps might be.

Our recommendation for RETT

In light of current developments we recommend acting being organised and forward-looking:

• When future restructurings involve real estate, it should be checked at the outset whether the transaction falls within the scope of the Capital Duty Directive.
• Appeals or litigation in similar cases that are already pending should be checked to see whether it would make sense to suspend the proceedings until the cases before the Federal Fiscal Court have been clarified.
• New tax assessment notices should be kept open within the appeal deadlines so as not to lose this option.

We’ll be glad to support you in analysing your particular structure and examine whether and to what extent the current ECJ decision is relevant to your case. We’ll also point out whether suspending proceedings or taking other steps would be worthwhile or practical.