Insight

Asset deal or share deal in property acquisitions

The structural choice between an asset deal and a share deal in the acquisition of commercial property determines the land transfer tax and liability.

20 August 2026 | Reading time 6 min. | Author: Martin Neupert

When acquiring a commercial property, the choice between an asset deal and a share deal has implications for land transfer tax, the transfer of liability and the scope of the warranty. This decision cannot be reversed at a later date. Under Section 1(1) of the German Real Estate Transfer Tax Act (GrEStG), an asset deal triggers a real estate transfer tax of between 3.5 and 6.5 per cent of the purchase price. In this case, the property is largely treated as a separate entity, with existing tenancies being transferred in accordance with Section 566 of the German Civil Code (BGB) and liability for contaminated sites being transferred by operation of law. In the case of a share deal, following the 2021 reform, land transfer tax is now payable if 90 per cent of the shares are held by a single party or are transferred within ten years. In return, the purchaser takes over the entire company, including all liabilities, contracts and risks.

The key decision: the land itself or a property company?

In an asset deal, the buyer acquires the land directly. The subject matter of the contract is the property itself, together with its constituent parts, rights and encumbrances. In a share deal, by contrast, the purchaser acquires the shares in the company that owns the land – the so-called property holding company. Under civil law, the land does not change hands but remains with the company. Only the company’s shareholders change.

This difference, which at first glance appears technical, has far-reaching consequences. In an asset deal, the property is treated in isolation: the buyer acquires precisely that property and only those liabilities which they expressly assume. In a share deal, by contrast, the entire company is transferred, including all liabilities, contracts and risks.

This initial decision determines all subsequent aspects: the amount of land transfer tax, the extent of liability and the scope of the due diligence. The decision should therefore be made at the outset, rather than only at the end of the negotiations.

The choice is rarely a free one, as both sides have differing interests. The seller often prefers a share deal, as the profit from the sale of shares may be more favourable for them from a tax perspective. The buyer, on the other hand, is wary of the liability risks associated with the company. The negotiated price reflects these differing interests.

Land Transfer Tax in an Asset Deal

The asset deal is straightforward. Pursuant to Section 1(1) of the Real Estate Acquisition Tax Act (GrEStG), the purchase of the land triggers real estate acquisition tax, which is calculated on the basis of the consideration, i.e. generally the purchase price. The tax rate is not set at federal level, but is determined by the federal states and ranges between 3.5 and 6.5 per cent depending on the state.

For larger properties, this amounts to a substantial sum. For example, a purchase price of ten million euros results in a land acquisition tax of between 350,000 and 650,000 euros, depending on the federal state. This cost forms part of the incidental acquisition costs and must be included in the calculation.

In accordance with Section 311b of the German Civil Code (BGB), the property purchase agreement must be notarised, and ownership is only transferred upon entry in the land register. The land transfer tax must be paid before the tax office issues the clearance certificate required for the transfer of title. The process is straightforward, but costly from a tax perspective.

In addition to the incidental costs, there are notary and land registry fees, as well as an estate agent’s commission where applicable. The incidental costs of an asset deal can easily total between eight and ten per cent of the purchase price, depending on the federal state and the property. This cost reduces the return on investment and must therefore be factored into the investment calculation from the outset.

Land Transfer Tax in a Share Deal: the 90 per cent rules

Share deals are attractive because the purchase of company shares does not, in itself, trigger land transfer tax. However, the legislature has restricted this approach on several occasions. Since the reform in 2021, the consolidation or transfer of shares triggers the tax as soon as 90 per cent of the shares are held by a single party or are transferred to new shareholders within ten years.

These transactions are covered by Section 1(2a) of the Real Estate Transfer Tax Act (GrEStG) for partnerships, by Section 1(2b) GrEStG for companies, and by Sections 1(3) and 1(3a) GrEStG for share consolidations. The previous threshold of 95 per cent and the five-year period have been tightened to 90 per cent and ten years, respectively. The traditional ‘RETT blocker’ – whereby a residual shareholding remained with a third party – no longer functions reliably in this form.

In order to structure a share deal in a way that is neutral for real estate transfer tax purposes, these thresholds and time limits must often be strictly adhered to over a prolonged period via a layered structure involving a co-shareholder. The statement ‘share deals are exempt from real estate transfer tax’ is incorrect when stated in such general terms.

As the tax saving is tied to a structure that must be maintained in the long term, the share deal becomes a long-term commitment. If the ten-year period is breached by a subsequent transfer of shares, or if a co-shareholder exceeds the threshold, land transfer tax may become payable retrospectively. The structure must therefore be monitored throughout its entire duration.

Transfer of liability: what the buyer acquires as part of the purchase

Another major difference concerns liability. In an asset deal, the purchaser generally acquires only the land and the liabilities expressly assumed. However, certain liabilities are transferred by operation of law. These include existing tenancies, which continue with the purchaser in accordance with Section 566 of the German Civil Code (BGB) (‘purchase does not terminate the tenancy’), a business that is transferred, triggering Section 613a of the German Civil Code (BGB), as well as outstanding business taxes, to which Section 75 of the German Fiscal Code (AO) may apply. Contaminated sites also encumber the land, regardless of whether the purchaser is at fault.

In a share deal, the company remains the owner and the debtor. Upon purchase, the buyer takes on everything that belongs to the company: liabilities, ongoing contracts, legal disputes, tax risks and the entire history of the company. Liability does not transfer separately but passes to the new shareholder along with the shares.

This difference is crucial when making a choice: in an asset deal, the property is treated in isolation, whereas in a share deal, it is assumed that the company’s liability situation can be brought under control through due diligence and the contract.

Historical liabilities are a particularly sensitive issue. Under the Federal Soil Protection Act, the landowner is liable for the remediation of contaminated sites, regardless of whether they caused the contamination. In an asset deal, this liability for the condition of the property is transferred to the buyer along with the land. Therefore, a soil survey and an explicit provision in the contract are mandatory.

Due Diligence and Warranties: Different Scopes

The difference in liability results in a different level of due diligence required. In an asset deal, the due diligence focuses on the asset itself, for example on the title to the property, planning restrictions, contaminated sites, tenancy agreements and public-law authorisations. The scope is limited to specific areas and the risk is manageable.

In a share deal, the buyer assumes the entire history of the company. The due diligence must therefore cover the areas of company law, taxation, employment relationships, financing and previous share transfers. A defect dating back years can have an impact on the current acquisition. The scope of the due diligence is correspondingly greater.

This has implications for the warranty. In an asset deal, representations regarding the asset are sufficient. In a share deal, however, the contract must contain a comprehensive list of warranties covering the balance sheet, tax matters, legal disputes and contingent liabilities. This must be supplemented by indemnities for identified risks. Where appropriate, warranty insurance should also be taken out. The tax savings from a share deal are partly offset by this additional effort.

When purchasing land, the warranty generally follows the law on material defects set out in the German Civil Code (BGB). However, the parties can largely waive this and replace it with their own list of warranties. Due to the customary exclusion of the statutory warranty (‘sold as seen’), the agreed representations and warranties become a decisive factor.

When to choose which approach: the decision matrix

The choice is not governed by a rigid rule, but rather by weighing up several factors. The main argument in favour of a share deal is the potential saving on land transfer tax, which can be substantial for large-scale properties and portfolios. However, this presupposes that the structure complies with the 90 per cent threshold and the ten-year time limit, and that the company has an acceptable liability profile.

The arguments in favour of the asset deal include the clear separation of the property, the reduced audit workload and the unambiguous liability structure. It is the standard approach for individual properties and wherever the buyer does not wish to assume the history of a third-party company or where the financing requires a clear collateral structure.

Other factors to be weighed up include the seller’s preference – which has its own tax implications for the seller – as well as the financing structure and future realisability. A sound decision arises from the interplay of land transfer tax, income tax, liability and financing, which is reached through consultation between legal and tax advisers.

As land transfer tax, income tax and depreciation are interlinked, the decision on the structure cannot be made without consulting a tax adviser. Whilst the solicitor deals with the liability and contractual aspects, the tax adviser calculates the tax burden over the holding period. Only by considering both aspects in a coordinated manner can it be determined which approach is ultimately the right one.

About the author

Martin Neupert

Partners · Property and Procurement

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Martin Neupert is a solicitor and founding partner of Maxfeld.legal. For over 30 years, he has been advising investors and companies on property and company law, and structuring commercial property acquisitions as asset and share deals.

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Frequently asked questions about asset deals and share deals

What is the difference between an asset deal and a share deal when purchasing property?

In an asset deal, the buyer acquires the land directly; in a share deal, however, the buyer acquires shares in the property company. Under civil law, the property does not change hands in a share deal. Only the shareholders change. In an asset deal, the property is transferred in isolation; in a share deal, the entire company, along with all its liabilities and risks, is transferred.

Is a share deal exempt from land transfer tax?

Not across the board. Since the reform in 2021, the consolidation or transfer of shares has triggered land transfer tax as soon as 90 per cent of the shares are held by a single party or are transferred to new shareholders within ten years (Sections 1(2a), 2b, 3 and 3a of the Land Acquisition Tax Act (GrEStG)). The previous thresholds of 95 per cent and five years, respectively, have been tightened to 90 per cent and ten years, respectively. It is possible to structure a transaction in a way that is neutral for land acquisition tax purposes, but this requires strict adherence to these thresholds and time limits.

How much is the land transfer tax on an asset deal?

Under Section 1(1) of the Real Estate Transfer Tax Act (GrEStG), the purchase of a plot of land gives rise to real estate transfer tax on the consideration, which is usually the purchase price. The tax rate is set by the federal states and ranges between 3.5 and 6.5 per cent, depending on the federal state. For a purchase price of ten million euros, this amounts to between 350,000 and 650,000 euros, depending on the federal state.

Which liabilities are automatically transferred in an asset deal?

In principle, the purchaser acquires only the land and the liabilities expressly assumed. However, certain liabilities are transferred by operation of law: existing tenancies in accordance with Section 566 of the German Civil Code (BGB), a business transferred as part of the sale in accordance with Section 613a of the German Civil Code (BGB), and outstanding business taxes in accordance with Section 75 of the German Fiscal Code (AO). Contaminated sites also encumber the land, regardless of whether the purchaser is at fault.

Why is the due diligence process more extensive in a share deal?

The purchaser assumes full responsibility for the company’s entire history. As part of the due diligence process, in addition to the property itself, the areas of company law, taxation, employment relationships, financing and previous share transfers must also be examined. This is because a shortcoming dating back several years could jeopardise the current acquisition. Consequently, the contract requires a comprehensive list of warranties and indemnities, which partly offsets the tax savings.

When is an asset deal the better option?

A share deal is appropriate for individual properties and in any situation where the buyer does not wish to assume the company’s past history, requires a clear liability and security situation for the property, or where the tax benefit does not justify the additional audit and due diligence costs. For large-scale properties and portfolios, however, a share deal may be advisable due to the potential savings on land transfer tax. The decision depends on the interplay between tax, liability and financing.

Asset deal or share deal in property acquisitions

The key decision: the land itself or a property company?

Land Transfer Tax in an Asset Deal

Land Transfer Tax in a Share Deal: the 90 per cent rules

Transfer of liability: what the buyer acquires as part of the purchase

Due Diligence and Warranties: Different Scopes

When to choose which approach: the decision matrix

About the author

Structuring your property purchase correctly

Frequently asked questions about asset deals and share deals

More articles on this topic

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