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German RETT is complex and constitutes a major hindrance to transactions, particularly to intercompany reorganisations. But a recent decision by the European Court of Justice (ECJ) on real estate transfer tax (RETT) could in future bring considerable relief and revitalise the discussion in Germany.

In a notice issued on 28/05/2026 (S 2332.1.1-29/4 St36) the Bavarian Tax Office addressed the payroll tax treatment of employee-owned shares subject to a liquidation preference – hurdle or growth shares, as they are known. The notice is of particular relevance to start-ups, growth companies and private equity structures. It clarifies that hurdle or growth shares do not automatically result in employment income. What is crucial is instead how the shares are actually structured, valued, validly implemented under company law, and how the ownership model is actually vested.