If a sole proprietorship is spun off into a newly established corporation, tax concessions can be claimed according to a decision by the Fiscal Court Münster.
According to § 6a of the Real Estate Transfer Tax Act (GrEStG), tax concessions can be claimed during restructurings within a group. It is disputed under tax law whether this provision also applies to the spin-off of a sole proprietorship into a newly established corporation. The Fiscal Court Münster affirmed this with a decision dated May 3, 2022, explains the business law firm MTR Legal Rechtsanwälte, which focuses part of its advisory services on tax law.
In the case before the Fiscal Court Münster with the file number 8 V 246/22 GrE, a GmbH was newly established in the course of a spin-off. Its sole shareholder was the sole owner of several properties, which he held as business assets of his sole proprietorship. In 2021, he spun off this sole proprietorship with all assets and liabilities into the newly established GmbH. Furthermore, shares in another GmbH, which was in turn the sole shareholder of other corporations holding properties, were transferred to the newly established company.
The tax office assessed real estate transfer tax for the spin-off and the transfer of the GmbH shares. The new GmbH opposed this and applied for a suspension of execution. She argued that the acquisition transactions were tax-exempt under § 6 a GrEStG.
She succeeded with her application. The Fiscal Court Münster confirmed serious doubts about the legality of the issued property tax assessment. Although the spin-off and the transfer of the properties were subject to real estate transfer tax, the exemption provision of § 6 a sentence 1 GrEStG applies, the tax court stated. This is not excluded by the fact that a sole proprietor contributed the properties to the new GmbH. All economically active legal entities should be regarded as companies within the meaning of § 6a GrEStG, regardless of their legal form. Accordingly, sole proprietorships are also covered by this legal form, the Fiscal Court Münster ruled, which allowed the appeal to the Federal Fiscal Court due to the fundamental importance.
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