Real Estate Investment Trusts (G-REITs) In Germany

This resolution will be retroactively having effect as at 1

January 2007. This will provide investors with an alternative

for indirect real estate investments.

A REIT must be a corporation listed on the Stock Exchange,

pursuant to the provisions in the German Stock Companies Act

and the German Commercial Code. Furthermore, the following

conditions must be met in order to qualify for REIT status:

The corporation must have its registered office and

management in Germany and must be registered on the

commercial trade register,

REITs are obliged to distribute at least 90% of

distributable profits to shareholders;

According to "widely held stock regulation", at

least 15% of shares must be permanently owned by

shareholders, who, in their turn, may not hold more than 3%

of shares. Direct participation for each individual

shareholder has been limited to 10% of the amount of

registered share capital;

German REITs must focus their investment mainly on real

estate. The minimum levels for the share of income from real

estate for REITs in the overall income and the share of the

real estate assets in overall assets of the G-REIT are

respectively at 75%;

The core business of a REIT must concern the holding and

the operation of real estate, i.e. not the trade with it as

such. Half of the REIT portfolio can be transacted within 5

years and the entire portfolio transacted or turned over

within a time delay of 10 years; and

The REIT status continues to depend upon the amount of

its shareholders' funds at the end of a financial year

which may not be lower than 45% of the amount at which the

immovable assets are applied for the individual or the

consolidated financial statements.

If the requirements to qualify as REIT status are met on a

sustained basis it will qualify for the following tax

concessions:

German REITs are neither subject to corporate income tax

nor to trade tax at company level;

Any dividends paid are subject to taxation at a personal

income tax rate without applying the half-income assessment

method; and

From the 2009 year dividends will be taxed at the flat

withholding rate of 25% (plus solidarity supplement and

church tax if applicable).

So far, only two German corporations have obtained REIT

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