Collision in Share Deals: State Tax Law and the Protection of the Free Movement of Capital in the EU

Or: Why an ECJ ruling could shake up real estate transfer tax in share deals

Real estate transfer tax taxes the transfer of real estate. European law protects the movement of capital. Share deals are exactly on this borderline.

A ruling by the European Court of Justice of 4 June 2026 could therefore go far beyond the specific individual case.

In the Nova Iberomoldes case (C-837/24), the ECJ had to rule on a Portuguese real estate transfer tax scheme that was applied to certain corporate restructurings.

What initially appears to be a special question of Portuguese tax law is already being assessed much more fundamentally by parts of the tax community. Leading consultants speak of a possible "earthquake for real estate transfer tax".

The starting point is the European Capital Accumulation Directive.

Its aim is to protect capital injections and certain corporate restructurings from tax burdens. The economic mobility of capital should not be hindered by indirect taxes.

On the other hand, there is an equally understandable interest of the Member States in revenue: the purchase of real estate is to be taxed.

For decades, this separation worked comparatively clearly. Capital movements on the one hand. Property transfers on the other.

Share deals have increasingly blurred this line.

This is because anyone who acquires shares in a land-owning company formally moves capital. At the same time, control of real estate can be transferred economically.

It is precisely at this interface that the ECJ ruling moves.

In the case decided, an internal restructuring was carried out.

Company shares changed hands legally. Economically, however, the real estate ownership remained entirely within the same group.

For the ECJ, this was precisely the decisive point.

The judges focused on the economic reality of the transaction. Despite the legal transfer of shares, they did not see any actual change in real estate ownership.

To put it simply:

The legal shell changed, but the economic allocation remained the same.

Thus, in the court's view, the very element that typically justifies a classic real estate transfer tax was missing: an actual change of ownership.

The decision directly affects Portuguese law.

However, the discussion does not end at the Portuguese border.

For many years, German real estate transfer tax law has also covered share deals and corporate restructurings via various supplementary and share settlement events.

The German regulations differ from the Portuguese regulations in their concrete design. However, the basic conflict is the same:

When is there actually a taxable real estate acquisition – and when is there only a restructuring under company law without an economic change of ownership?

Certainly, proceedings are already pending or will be pending in Germany, which are now likely to wait for the further evaluation of the Luxembourg decision.

The more exciting question in Germany is therefore of course how far national legislators can go in the taxation of corporate restructurings if European law also wants to protect the free movement of capital.

The ECJ has sent a remarkable signal in this regard: not every legal transfer is automatically an economic change of ownership.

And where there is no economic change of ownership, the tax justification of a burden could also reach its limits.

• It is still unclear what concrete consequences the ruling will have for German real estate transfer tax.
• However, it is already clear today that the ECJ has focused on the economic reality of share deals.
• The judgment thus touches on a fundamental question that goes far beyond real estate transfer tax.
• Europe protects the mobility of capital. National tax systems protect the taxation of real estate.
• For investors in Germany with open real estate transfer tax cases, it should therefore be worthwhile to follow further developments closely. Because while legal opinions can change, finality is usually final.