REALWorld Law

Sale and purchase

Taxation of asset deals

Which taxes are relevant/which transaction costs will be incurred when buying real estate as an asset (asset deal) and how are the transaction costs shared between the buyer and seller?



The most important tax is the property transfer tax. Most sale and purchase agreements stipulate that this tax is paid by the buyer.

The rate of property transfer tax is between 3.5% and 6.5% of the purchase price, depending on the German federal state.

VAT may also apply. The rate of VAT is 19%. Property transactions are not normally subject to VAT if they form part of the transfer of a business as a going concern. Even where this is not the case, property transactions are generally exempt from VAT, although a seller can opt for VAT to apply to a particular sale. This can be advantageous to a buyer where the VAT on costs incurred during related development activities can be offset against VAT on the purchase price.

Transaction costs usually include:

  • the notary's fees, which are fixed by statute;
  • the property transfer tax;
  • the legal costs of registration/deletion of priority notices, land charges and transfer of title; and
  • the fees of the lawyers instructed to carry out due diligence and draft the sale and purchase agreement.

Normally each party pays its own legal fees. Property transfer tax, notarization fees and the legal costs related to the implementation of the sale and purchase agreement are paid by the buyer, with the exception of any legal costs incurred in connection with the discharge of existing encumbrances by the seller.