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
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
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
status (alstria First German REIT and Fair Value REIT).
However, there are several "Pre-REIT's"
(corporations that but for the ability to operate on capital
markets would be eligible) and other additional REIT projects.
Thus far it still
remains to be seen whether the introduction of G-REITs will
lead to an improvement and greater competitiveness of
Germany's financial centre.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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