The last few months have been marked by the COVID-19 pandemic with its massive impact on business and the real estate industry. As a result of the general easing of restrictions, some organisational problems for the preparation and execution of real estate transactions have also disappeared.
This should be an occasion to recall the amendments to the Money Laundering Act (AMLA) that have come into force since the beginning of the year with regard to the preparation and execution of notarisation procedures.
For the first time, the amended AMLA imposes prohibitions of notarisation in connection with the real estate sector in two constellations. This is due to the fact that the legislator considers the real estate sector to be highly susceptible to money laundering.
In general, there is a first prohibition of notarisation for real estate transactions within the meaning of § 1 of the German Real Estate Transfer Tax Act (GrEStG), which covers both asset deals and share deals, unless conclusive documentation of the ownership and control structure of the companies involved is provided. This is related to the obligation to identify the beneficial owner. It is important to bear in mind here that the structure up to the level of the beneficial owner must be explained to the notary for this purpose and that control can be exercised not only over the shareholding relationships, but also over other constellations, such as trust or control agreements, and also through special voting rights. In most cases, a structure chart containing this information will be helpful. This is all the more true for cross-border investment structures. As a rule, these documents should be available, at least if the transaction is planned to be financed (also) with debt capital, since banks also have extensive documentation requirements for reasons of money laundering (AML) and of customer identification (KYC). Against this background as a result, there should be no great delay in the transaction.
More critical is the second, albeit narrower, case of the acquisition of a domestic real property by a foreign company as the buyer. In this constellation, there is an additional prohibition of notarisation if the foreign company is not registered in the transparency register of Germany or an EU member state. In this case, there is an early need for action, particularly if new special purpose vehicles are established for the transaction only upon a satisfactory due diligence. Without a registration in the transparency register, the notarisation must not take place. The acquisition with companies that have been founded but not yet registered in all registers is therefore no longer possible. The picture of how quickly an entry in the transparency register can be made in various jurisdictions and an extract from the transparency register can also be obtained is still forming. It is important to note that although a simplified access for the public to the information is enabled in some places, the information provided usually does not contain all the necessary data to be collected. In Germany, extracts from the transparency register are not yet available electronically as easily as in the commercial register and the electronic land register. Although applications are made purely via an Internet site, the procedure is not particularly user-friendly and, above all, the applications are processed "manually" by employees. On average, this takes several days, sometimes even weeks. In cases where no transparency register has yet been set up abroad, as, for example, in the Netherlands, the workaround would have to be to have an entry made in the German transparency register. The same applies to companies from non-EU countries. Here, considerable time delays for the transaction may occur.
It is worthwhile to prepare and compile the documentation of the ownership and control structure at an early stage and, in addition, in the case of an acquisition by a foreign company, to arrange for the entry in the transparency register or the issue of an extract from the transparency register in good time. If the excerpt is not available in English in other EU countries and is only written in a less common language, a precautionary translation into German may be advisable. In this case, it is advisable to contact the notary public to be entrusted with the notarisation at an early stage in order to clarify language skills and details.
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