BFH denies conflicting tax assessment
The Bundesfinanzhof (BFH, Federal Fiscal Court) held in its judgment of 29 July 2026 – II R 11/24 that, where real property is acquired by a GmbH, there is no conflicting tax assessment under § 174 Abs. 1 Satz 1 der Abgabenordnung (AO, German Fiscal Code) if real estate transfer tax is assessed on the full agreed consideration and, at the same time, gift tax is assessed due to a gratuitous transfer in connection with a hidden profit distribution.
According to the decision of the Second Senate, the assessment of real estate transfer tax on the basis of the agreed purchase price and the gift-tax treatment of a gratuitous transfer in the circumstances assessed here are not mutually exclusive in such a way that the real estate transfer tax assessment notice would have to be amended under § 174 Abs. 1 Satz 1 AO. The BFH set aside the judgment of the Finanzgericht Mecklenburg-Vorpommern (Fiscal Court of Mecklenburg-Western Pomerania) of 19 September 2023 – 1 K 233/22 and dismissed the action.
The decision was published on 15 October 2026. A separate press release by the Bundesfinanzhof on these proceedings is not listed on the court’s homepage.
Facts: property purchase by a GmbH at an increased purchase price
Purchase agreement for developed real property
The claimant, a GmbH, acquired by notarial agreement dated 24 February 2011 a plot of land developed with a commercial building. The seller was the then life partner of the claimant’s sole shareholder and managing director. The notarised purchase agreement stated a purchase price of EUR 1,100,000.
By assessment notice dated 30 June 2011, the competent tax office assessed real estate transfer tax against the acquiring GmbH. It used an assessment basis of EUR 1,100,000 and assessed the tax at EUR 38,500. This notice became final and binding.
Gift tax due to a gratuitous transfer
Later, the tax office competent for gift tax assessed gift tax of EUR 175,590 against the seller. This was based on the assumption that there had been a gratuitous transfer from the claimant’s sole shareholder to the seller.
The tax office relied on the fact that the purchase price paid, EUR 1,100,000, was significantly above the separately and uniformly determined real property value. This value had been determined at EUR 480,000 by notice dated 30 March 2022. The gift-tax assessment related to a gratuitous transfer due to a hidden profit distribution.
Dispute concerning amendment of the real estate transfer tax assessment notice
Application by the GmbH under § 174 Abs. 1 Satz 1 AO
By letter dated 27 May 2022, the GmbH applied for an amendment of the real estate transfer tax assessment notice of 30 June 2011. It relied on § 174 Abs. 1 Satz 1 AO and argued that the same transaction had been taken into account for both real estate transfer tax and gift tax.
The tax office rejected the amendment application by notice dated 14 June 2022. The objection was unsuccessful. The gift tax assessment notice issued against the seller became final and binding; the tax office maintained its refusal to reduce the real estate transfer tax.
Decision of the Finanzgericht Mecklenburg-Vorpommern
The Finanzgericht Mecklenburg-Vorpommern upheld the action. It ordered the tax office to amend the real estate transfer tax assessment notice of 30 June 2011 and to assess the real estate transfer tax at EUR 16,800.
In the Fiscal Court’s view, § 174 Abs. 1 Satz 1 AO was applicable. It considered the amount exceeding EUR 480,000 plus a redemption amount of EUR 14,681.25 to have been taken into account twice. This part of the purchase price had been included both in the real estate transfer tax assessment notice and in the gift tax assessment notice.
The judgment of the lower court of 19 September 2023 – 1 K 233/22 was documented, among other things, under the title “Übertragung eines Grundstücks: Gleichzeitige Besteuerung eines notariell …”. In the proceedings, the Fiscal Court had also drawn the parties’ attention to BFH decisions on the gift-tax treatment of hidden profit distributions to related persons.
Legal starting points of the BFH decision
Real estate transfer tax based on the agreed consideration
For real estate transfer tax purposes, the BFH relied on § 8 Abs. 1 GrEStG (German Real Estate Transfer Tax Act) in conjunction with § 9 Abs. 1 Nr. 1 GrEStG. Accordingly, real estate transfer tax on a purchase is generally assessed on the consideration. The consideration includes, in particular, the purchase price.
According to the BFH decision, what was agreed as the purchase price is decisive for this assessment. This applies irrespective of whether the consideration is higher or lower than the value of the real property.
No application of the tax exemption under § 3 Nr. 2 Satz 1 GrEStG
The BFH also addressed § 3 Nr. 2 Satz 1 GrEStG. This provision concerns gifts of real property inter vivos within the meaning of the Erbschaftsteuer- und Schenkungsteuergesetz (ErbStG, German Inheritance Tax and Gift Tax Act).
According to the decision, this tax exemption does not apply in the present factual scenario. In the BFH’s reasoning, it is relevant only where a purchase price is below the value of the real property. In the case in dispute, however, the agreed purchase price was higher than the determined real property value.
No conflicting tax assessment under § 174 Abs. 1 Satz 1 AO
BFH distinguishes between real estate transfer tax and gift tax
The BFH denied the existence of a conflicting tax assessment within the meaning of § 174 Abs. 1 Satz 1 AO. Such an assessment requires that a specific set of facts has been taken into account in several tax assessment notices to the detriment of one or more taxpayers, although it should have been taken into account only once.
In the BFH’s view, the real estate transfer tax assessment notice was not erroneous. The real estate transfer tax could be assessed on the agreed consideration of EUR 1,100,000. The gift-tax treatment at the level of the seller did not mean that the assessment basis for real estate transfer tax had to be reduced retrospectively.
No correction of the final and binding real estate transfer tax assessment notice
The claimant had argued that a gratuitous transfer under § 7 Abs. 1 Nr. 1 ErbStG and taxation as consideration under § 8 Abs. 1 GrEStG must be mutually exclusive. Otherwise, the same economic transaction would be subjected to multiple charges.
The BFH did not follow this line of argument. It held that, in the relationship between real estate transfer tax and gift tax in this constellation, there is no conflicting tax assessment. The judgment of the Fiscal Court was set aside, the action was dismissed, and the claimant must bear the costs of the entire proceedings.
Significance of the decision for excessive purchase prices
Core issue in the proceedings
The central question was whether a real estate transfer tax assessment notice based on the agreed purchase price can be amended if the receipt of the consideration has triggered gift tax for the recipient. Even before the BFH decision, this question had already been discussed in advisory practice in connection with a possible double burden in cases of excessive purchase prices.
The BFH has now clarified that the assessment of gift tax for a gratuitous transfer due to a hidden profit distribution and the assessment of real estate transfer tax in the full amount of the consideration are not automatically to be classified as conflicting tax assessments.
Key points of the decision
The following statements are particularly significant for the classification of the decision:
- In the case of a real property purchase, real estate transfer tax is generally assessed on the agreed consideration.
- A purchase price above the value of the real property may be taken fully into account as the assessment basis for real estate transfer tax purposes.
- In the constellation decided, the gift-tax treatment of a gratuitous transfer due to a hidden profit distribution does not lead to an amendment under § 174 Abs. 1 Satz 1 AO.
- According to the BFH decision, § 3 Nr. 2 Satz 1 GrEStG does not apply where the purchase price is above the value of the real property.
Frequently asked questions
BFH II R 11/24: When is there no conflicting tax assessment under § 174 Abs. 1 Satz 1 AO?
According to the BFH judgment, there is no conflicting tax assessment if a GmbH acquires real property at a purchase price above the value of the real property and real estate transfer tax is assessed on the full consideration while gift tax is assessed due to a gratuitous transfer resulting from a hidden profit distribution.
Real estate transfer tax and gift tax in cases of excessive purchase price: Must the real estate transfer tax be reduced?
In the constellation decided by the BFH, the final and binding real estate transfer tax assessment notice did not have to be amended under § 174 Abs. 1 Satz 1 AO. The BFH focused on the fact that real estate transfer tax is assessed on the agreed consideration.
What practical consequences does the BFH judgment II R 11/24 have for companies when a GmbH purchases real property?
Companies must take into account that an agreed purchase price above the value of the real property may be fully decisive for real estate transfer tax purposes. According to this decision, gift-tax treatment at the level of the recipient of the consideration does not automatically lead to a correction of the real estate transfer tax.
Assessment by MTR Legal Rechtsanwälte
The BFH judgment makes clear that, in real estate transactions with a corporate-law dimension, the tax treatment must be examined on several levels. Particularly where purchase prices deviate significantly from the determined real property value, real estate transfer tax, gift tax and hidden profit distributions may be closely connected without this necessarily resulting in a correction under § 174 Abs. 1 Satz 1 AO.
MTR Legal Rechtsanwälte advises companies, investors and high-net-worth private individuals on tax-law issues relating to transactions, participation structures and asset transfers. Further information can be found under Legal advice in tax law.
