Real estate investment trusts (REIT)
are vehicles dedicated to investments in the real estate market
, which can also include mortgages investments
. They are created in such a manner that they will provide the highest return on investment
(in the form of dividends) to its shareholders
. When registering a REIT in Germany
, investors should know that such vehicles
have a special statute in terms of taxation
, receiving many incentives on which our German law firm
can provide more details.
Legislation referring to German REITs
The REITs were introduced on the German market in 2007, when the local authorities enforced the Act for the Creation of German Real Estate Stock Corporations with Publicly Listed Shares. The Act became effective starting with 1st of January 2007.
One of the main conditions to qualify as a German REIT is to list the respective investment vehicle on a regulated market. Such entities must have at least 75% of their assets invested on the real estate market.
The REITs in Germany
can benefit from full tax exemptions
referring to the corporate tax and trade tax
if their main focus is on the property market
(residential or commercial) and if 90% of the entity’s profits
are distributed to its investors, in the form of dividends.
The applicable legislation is also stipulating that a German REIT
must have at least 100 shareholders
and there are special conditions applying in this situation, such as matters referring to ownership
, on which our team of attorneys in Germany
can offer in-depth information. For example, the REIT law
specifies that a shareholder
can’t own more than 10% of the company’s assets
Taxation of a REIT in Germany
Although the REIT
is not directly taxed for its income, the German law
provides a withholding tax
available for the shareholders
, which are imposed with a 26,375% withholding tax on dividends
. Non-resident investors acting as shareholders
are taxed under the German taxation system
, which means that they will be taxed on their earnings
Businessmen interested in finding out more details on the real estate investment trusts in Germany
are invited to contact our German lawyers
for legal counselling.