In a recent decision (judgment of June 4, 2026, Case C‑837/24 – Nova Iberomoldes), the European Court of Justice (ECJ) addressed the practical question of whether a Member State may impose real estate transfer tax on the acquisition of shares in a company owning immovable property as part of an intra-group restructuring operation. In the Court's view, national supplementary provisions, that is, regulations that treat the acquisition of shares in such companies as equivalent for tax purposes to the direct transfer of ownership of immovable property, are incompatible with the prohibition on any form of indirect tax whatsoever under Article 5(1) in the context of restructuring operations within the meaning of Directive 2008/7/EC. The exceptions under Article 6(1) do not apply, and a general presumption of abuse cannot justify the taxation. Since Portuguese and German real estate transfer tax law resemble each other in key aspects, it is necessary to examine the extent to which the decision also affects German real estate transfer tax in the context of intra-group restructuring operations.
The Portuguese holding company Nova Iberomoldes was formed in March 2019 as a capital company within the meaning of Article 2 of Directive 2008/7/EC. Its sole shareholder, also a holding company, paid the entire share capital by means of non-cash contributions in the form of shareholdings it held in subsidiaries. One of these subsidiaries, a limited liability company whose share capital was now 100% owned by Nova Iberomoldes, owned two immovable properties. The Portuguese tax authorities subsequently levied the municipal tax on the transfer of immovable property for consideration (IMT) based on a national provision that treats the acquisition of at least 75% of the shares in a company owning immovable property as equivalent to a transfer of immovable property.
The ECJ classified the transaction as a restructuring operation within the meaning of Article 4(1)(b) of Directive 2008/7/EC: As part of its formation, Nova Iberomoldes acquired shares representing the majority of voting rights in other capital companies and, in return, the contributing company received all of the securities representing Nova Iberomoldes' capital as consideration. The fact that there was no transfer of other elements, resources, or the entirety of the equity instruments is irrelevant. Such restructuring operations must not be subjected to any form of indirect tax whatsoever under Article 5(1)(e) of the Directive. The IMT constitutes an indirect tax within the meaning of this provision, as it is imposed not on the collection of income or the possession of assets by a taxpayer, but on the movement of shares of companies owning immovable property.
The Court examined all the exceptions under Article 6(1) of the Directive and ruled that none of them applied. The exception for duties on the transfer of securities (point (a)) does not apply, as the transfer of shares does not constitute an independent transaction but rather an incidental transaction, integral to a restructuring operation covered by Article 5(1)(e). The exception for transfer duties on the transfer of immovable property to a capital company (point (b)) is not relevant either, as there was neither a transfer of legal ownership nor a transfer of actual ownership of the immovable property, the properties remained owned by the same company whose shares were contributed to Nova Iberomoldes. The ECJ expressly rejected the economic approach advocated by Germany and Portugal, according to which an economic transfer of ownership of immovable property had taken place. Particularly in the case of an intra-group restructuring, ownership of the real estate remains within the same group. The exception for transfer taxes in cases of compensation with assets other than shares (point (c)) is also inapplicable, as the contribution was compensated with shares.
The ECJ also rejected Portugal's argument that the provision was justified by the objective of preventing tax evasion and avoidance. The national provision is based on a general presumption, as it applies without exception to every acquisition of shares in companies owning immovable property, regardless of whether there is any concrete evidence of abusive or fraudulent practices. This goes beyond what is necessary to achieve the objective of combating tax evasion and avoidance and is therefore not consistent with the principle of proportionality. The Court further noted that neither had the Portuguese Government claimed that the transaction at issue was a fraudulent or abusive practice, nor was there anything in the documents before the Court to suggest this.
The decision is likely to have significance beyond the specific Portuguese case. Given the structural similarities between Portuguese and German real estate transfer tax laws, the question arises as to whether and to what extent the principles of the decision can be applied to the German supplementary provisions. German real estate transfer tax law also provides for supplementary tax bases in Section 1(2a), (2b), (3), and (3a) of the Real Estate Transfer Tax Act (GrEStG), under which a flat-rate real estate transfer tax is levied upon the acquisition of shares in companies holding real estate, even if there is no change in ownership of the real estate itself. Like the Portuguese regulation challenged by the ECJ, these provisions are linked exclusively to the attainment of certain ownership thresholds, without distinguishing whether the transaction is based on an abusive arrangement or an economically justified motive. To the extent that these provisions apply to transactions that qualify as restructuring operations within the meaning of Directive 2008/7/EC, they are likely to be challengeable on the basis of the primacy of Union law.
German law does provide, under Section 6a of the Real Estate Transfer Tax Act (GrEStG), for a tax relief for intra-group restructuring operations. However, this does not fully close the regulatory gap identified by the ECJ, as it is subject to significantly narrower conditions than the prohibition on taxation under Directive 2008/7/EC. Section 6a of the GrEStG requires an uninterrupted holding of at least 95% over a period of five years before and five years after the legal transaction and presupposes a group relationship between the controlling company and its subsidiaries. The Directive, on the other hand, already covers restructuring operations in which only a majority of voting rights are acquired, and does not require either holding periods or a group relationship in the strict sense. In practice, this means that a transaction may qualify as a restructuring operation within the meaning of Article 4 of the Directive and thus fall under the prohibition on any form of indirect tax whatsoever under Article 5(1), without simultaneously fulfilling the requirements of Section 6a GrEStG, for example, because the 95% ownership threshold is not reached, the holding periods are not observed, or there is no group relationship in the strict sense.
It remains to be seen what specific implications the decision will have for German real estate transfer tax law. It will be important to observe how the national legislature reacts and whether the tax authorities incorporate the ruling into their administrative practice or, if necessary, respond with a non-application decree. For all pending cases and restructuring operations that need to be reconsidered, the decision nevertheless offers promising lines of argumentation. In the case of intra-group restructuring operations involving real estate, particularly when establishing or restructuring holding structures through the contribution of majority stakes, it should be carefully examined in the future whether the respective transaction could fall under the protection of Directive 2008/7/EC and whether a real estate transfer tax liability is precluded under EU law. It is also advisable to review existing real estate transfer tax assessment notices based on the supplementary provisions of Section 1(2a), (2b), (3), and (3a) of the GrEStG that result from a restructuring operation within the meaning of Directive 2008/7/EC to determine whether they can be challenged. In any case, it can be assumed that the real estate transfer tax situation for intra-group restructuring operations will change significantly in favor of taxpayers.
Morrison Foerster's German tax practice regularly advises large national and international corporations, medium-sized companies, and investment structures, closely monitors current developments, and is available to answer any questions at any time.