The Federal Fiscal Court has ruled that the „rescission“ of an acquisition transaction under the Real Estate Transfer Tax Act (Section 16 (1) No. 1) is only possible if the entire purchase agreement is rescinded completely and effectively under civil law. This is not the case if only one of the two buyers has withdrawn from the contract, while the other buyer has taken over the entire property.
Practical example:
By notarized contract dated 2 April 2020, the plaintiff and her then partner each purchased ½ of a plot of land with a detached house and garages. The contracting parties declared the conveyance and agreed that the purchase price of € 310,000 would not be due before 1 July 2021. A priority notice of conveyance was entered in the land register on 8.4.2020. The plaintiff withdrew from the purchase agreement by having her share taken over by her partner at the time. The plaintiff took the view that this was a rescission of the purchase agreement, meaning that the real estate transfer tax assessment notice addressed to her should be revoked. The tax office, on the other hand, took the view that the withdrawal of a buyer from a joint obligation could not be regarded as a complete rescission of the purchase agreement, which would justify the annulment of the real estate transfer tax.
The case therefore concerned the question of whether the „withdrawal“ of a buyer from a joint obligation can be regarded as a complete rescission of the purchase agreement. The BFH has clarified that, in the case of the joint acquisition of a property, both purchasers have a indivisible claim to the transfer of ownership, which can only be rescinded in its entirety. The fact that one buyer is replaced by the other does not change the continuing obligation arising from the original claim to transfer of ownership.
The BFH therefore overturned the previous decision of the Cologne Tax Court to the contrary and confirmed the tax assessment of the tax office. Conclusion: The mere withdrawal of an individual buyer is not a basis for the annulment of the tax assessment pursuant to Section 16 (1) No. 1 GrEStG. The plaintiff is therefore obliged to pay the previously assessed real estate transfer tax.