Navigating real estate around the world
A report on a session at the 15th Annual IBA London Finance and Capital Markets Tax Conference held on 26 and 27 January 2026
Chair
Pamela M Capps, Herbert Smith Freehils Kramer, New York
Panellists
Malte Bergmann, YPOG, Hamburg
Mariana Díaz-Moro, Gómez-Acebo & Pombo, Madrid
Gerald Montagu, Stephenson Harwood, London
Riccardo Petrelli, Legance, Milan
Karin Spindler-Simader, Wolf Theiss, Vienna
Reporter
Adnand Sulejmani, Ashurst Perkins Coie, Luxembourg
Introduction
Real estate transfer tax regimes
A central theme of the panel was the increasingly stringent approach jurisdictions are taking towards taxing share deals involving real estate. In Austria, recent amendments effective from July 2025 now extend the real estate transfer tax (RETT) to any transaction where a company anywhere in the ownership chain holds Austrian real estate. The threshold for triggering Austrian RETT has been lowered to 75 per cent ownership, whether acquired directly, indirectly, in one transaction or through a consolidation and with a seven-year look-back period. The applicable tax rate is 3.5 per cent of market value for real estate-focused entities and 0.5 per cent of assessed property value for companies holding real estate incidental to an operative business.
Germany employs a similar regime, although with a higher threshold of 90 per cent and an extended ten-year look-back period. German RETT rates vary by federal state, ranging from between 3.5 per cent and 6.5 per cent based on the fair market value, with most jurisdictions applying rates in the five per cent to six per cent range. Both Austria and Germany tax 100 per cent of the property value once the threshold is met, not merely the proportion transferred. Practitioners emphasised that even minor fluctuations in shareholding percentages, particularly in private equity fund structures, can inadvertently trigger RETT multiple times, creating significant and often unexpected costs.
Spain takes a different approach, applying an anti-avoidance presumption that triggers transfer tax when control is obtained over an entity whose assets consist of at least 50 per cent Spanish real estate not allocated to a business activity.
Italy similarly relies on an anti-abuse framework rather than prescriptive rules, focusing on whether a restructuring or acquisition was undertaken with the sole purpose of avoiding value-added tax (VAT) and transfer taxes. The panellists noted that while the mechanisms differ across jurisdictions, the practical outcome is consistent: any change in the ownership structure of a company holding real estate assets will likely trigger some form of tax consequence, necessitating early consultation with local counsel.
In the US, there is no federal transfer tax. Instead, transfer taxes are imposed at the state and local level, with significant variations in the rules and rates applied. Some jurisdictions, such as New York City, are particularly aggressive, applying tax on a 50 per cent transfer with a three-year aggregation period, although tax is calculated only on the percentage transferred rather than the full property value. The UK similarly exhibits complexity, with separate regimes in Scotland, Wales and England.
Transparency and information exchange
The panel addressed the growing trend towards transparency in real estate ownership, driven by both Organisation for Economic Co-operation and Development (OECD) initiatives and domestic regulatory developments. A new OECD framework for information exchange on immovable property was approved in May 2025 by the Committee on Fiscal Affairs. By December 2025, 26 jurisdictions, including Spain and the UK (but notably not the US), had committed to implementing this voluntary framework.
The framework comprises two models: Model One concerns ownership and acquisition data, while Model Two provides for the annual automatic exchange of information regarding disposals and income derived from immovable property. The panellists observed that this initiative aligns with broader EU policy and may eventually support minimum taxation proposals for high-net-worth individuals. They also noted the overlapping nature of the existing transparency instruments, including anti-money laundering (AML) requirements, ultimate beneficial ownership (UBO) registers and now real estate-specific reporting, and suggested that a unified register might reduce administrative burdens while achieving the same transparency objectives.
In the US, a beneficial ownership reporting regime introduced in 2024 initially met with significant pushback due to its broad scope and was subsequently scaled back to cover only foreign entities operating domestically. At the state level, jurisdictions such as New York require disclosure of beneficial ownership in connection with property transfers.
Hybrid and operational real estate structures
The discussion then turned to the tax complexities arising from hybrid or operational real estate investments, such as hotels and data centres, where real estate assets are essential, but the primary business activity involves providing services rather than passive leasing. A common structuring approach in Europe involves separating the real estate holding entity (PropCo) from the operating company (OpCo), with lease payments flowing from the OpCo to the PropCo to shift income towards tax-advantaged vehicles or exempt entities.
While this structure can achieve tax efficiency, the panellists warned that it attracts significant scrutiny from tax authorities, particularly where the arrangements appear designed solely to generate deductible expenses on one side and non-taxable receipts on the other. In jurisdictions with aggressive tax administrations, such as Italy, authorities may challenge whether the master lease arrangement has genuine economic substance or constitutes an abuse of law. Similar transfer pricing and anti-avoidance considerations apply in the US, often varying by state, with historical examples of taxpayers attempting to relocate operating companies to lower-tax jurisdictions while retaining property ownership in higher-tax states.
Permanent establishment (PE) risks
The panel highlighted the PE risks associated with hybrid real estate investments, with the UK moving towards closer alignment with the OECD definition of a PE.
An Indian Supreme Court case was cited as a cautionary example: a United Arab Emirates company providing strategic oversight services under a 20-year agreement to Indian hotels was found to have created a PE in India, despite the group being loss-making globally. The Court applied transfer pricing to impute taxable profits, illustrating the risk that brand management or quality assurance activities, which are distinct from actual hotel operations, may nonetheless create PE exposure.
Jurisdiction-specific developments
The panel concluded by providing brief updates on recent developments in each represented jurisdiction.
In the UK, recent Court of Appeal judgments have addressed capital allowances for wind farms and data centres, clarifying which types of preliminary expenditure qualify for tax relief and emphasising the importance of understanding special regimes in areas such as freeports (or ‘green ports’ in Scotland), where enhanced allowances of ten per cent apply to physical structures.
In Spain, while numerous proposed real estate tax measures have not been enacted in recent years, popular regimes such as the listed public limited companies for investment in the real estate market (Sociedades Anónimas Cotizadas de Inversión Inmobiliaria or SOCIMI) (the Spanish equivalent of a real estate investment trust (REIT)) and special regimes for entities leasing residential property remain significant planning tools.
In the US, the most notable development was what did not occur: the proposed elimination of tax-free exchanges and changes to the REIT regime were not enacted.
Austria’s new RETT regime was acknowledged as a significant cost factor in real estate transactions but one that may also contribute to addressing the country’s budget deficit.
No major changes have occurred in Germany.
In Italy, broader tax system reforms are underway and may eventually affect the VAT treatment of real estate.