Tax Circular on TOGC relief in case of leased business premises

The Federal Ministry of Finance published a new tax circular allowing the tax relief for the sale of a business unit (“VAT-free TOGC”) even if only the essential movable assets are transferred while the essential business premises are merely leased to the buyer. According to the court, it is sufficient that the buyer is able to continue the business in practice under the lease contract. In this case, it did not matter that the ownership of some essential assets (i.e., the leased business premises) was not transferred to the buyer. The lease contract does not necessarily need to have a minimum duration to allow for the relief (this circular incorporates corresponding European Court of Justice judicature into the German tax guidelines).