The European Commission is taking Germany to the European Court of Justice (ECJ) over an alleged discriminatory tax regime.
The case concerns the tax treatment of capital gains from the sale of real estate in Germany, the Brussels government announced on Thursday.
Germany currently defers taxes on profits from the sale of real estate if they are reinvested in new assets – but only if the real estate can be assigned to a domestic permanent establishment.
Companies based in Germany are assumed to have such an establishment, even if they do not trade in Germany. However, companies from other European countries that sell real estate in Germany will only receive this tax deferral if they are also allocated a permanent establishment in Germany.
According to the statement, the commission considers that this regulation conflicts with EU rules on the free movement of capital. Discussions on the issue started with German authorities in 2019, but according to the commission, Germany’s efforts to find a solution to the issue have not been sufficient.
