Taxation of asset-managing real estate partnerships in a group of companies
Following to tax advices of several tax audits in the German real estate sector, Patrick Bubeck and Dr. Tobias Stiegler discussed various legal issues of the taxation of property-owning partnerships in a recent essay in NWB, a well-known German journal .
Domestic and foreign companies have several options re structuring their German real estate investments. Flexibility in payments, fast liquidity facilities, automatic consolidation of taxable income or German trade tax avoidance etc. can lead (inter)national real estate companies to structure their investments via a transparent, asset-managing holding structure of the respective German real estate investments.
This structure of real estate investments causes certain tax complexity. For these reasons, various legal questions arise regarding the determination of taxable profits at the level of the asset-managing PropCo and the holding company (e.g. management and financing holding company). A central point of dispute in such structures is the use of losses (e.g. in case of modernization/ renovation of a property) within the property holding group for income tax purposes. In this respect, our two tax advisors contradict the previous legal practice of the tax authorities, which can be justified on the basis of current case law.
Your TAXGATE Team will be happy to assist you in structuring your real estate investments.