{"id":1085,"date":"2026-05-27T09:03:08","date_gmt":"2026-05-27T07:03:08","guid":{"rendered":"https:\/\/realestate-advisory.de\/?p=1085"},"modified":"2026-05-27T13:56:07","modified_gmt":"2026-05-27T11:56:07","slug":"%c2%a7-240-kagb-in-der-praxis-relevanz-fur-die-strukturierung-von-immobilienfonds","status":"publish","type":"post","link":"https:\/\/realestate-advisory.de\/en\/insights\/structuring\/%c2%a7-240-kagb-in-der-praxis-relevanz-fur-die-strukturierung-von-immobilienfonds\/","title":{"rendered":"Section 240 of the KAGB in Practice: Shareholder Loans from Real Estate Investment Funds"},"content":{"rendered":"<div class=\"bs-callout bs-callout-warning\"><strong>Important Note<\/strong><br \/>\nThis content does not constitute tax or legal advice. It is provided solely for general informational purposes and is not a substitute for individual advice from qualified tax or legal advisors.<\/div>\n<p data-start=\"295\" data-end=\"644\">Real estate financing through fund structures is typically carried out via intermediary real estate companies. For fund managers, this raises not only the question of how capital is to be provided, but also how this structure can be designed to be tax-efficient, compliant with regulations, and operationally flexible.<\/p>\n<p data-start=\"646\" data-end=\"1014\">Section 240 of the KAGB governs the granting of shareholder loans by a capital management company on behalf of a real estate investment fund to such property companies. This provision thus constitutes a central component of the regulatory framework for internal financing within real estate funds.<\/p>\n<p data-start=\"1016\" data-end=\"1363\">At the same time, the structuring of shareholder loans directly raises tax issues, particularly with regard to interest deductibility, profit shifting, and transfer pricing. This creates a tension for fund managers between regulatory requirements and tax optimization, which must be actively managed.<\/p>\n<p data-start=\"1419\" data-end=\"1599\">Section 240 of the KAGB generally permits the granting of shareholder loans, but makes such loans subject to specific conditions of both a qualitative and quantitative nature.<\/p>\n<p data-start=\"1601\" data-end=\"1656\">Key elements include requirements for:<\/p>\n<ul data-start=\"1657\" data-end=\"1808\">\n<li data-section-id=\"1b27z03\" data-start=\"1657\" data-end=\"1689\">the collateral for the loans<\/li>\n<li data-section-id=\"1ruz17i\" data-start=\"1690\" data-end=\"1756\">the loan-to-value ratio<\/li>\n<li data-section-id=\"1fccoa7\" data-start=\"1757\" data-end=\"1808\">the inclusion of certain third-party funding<\/li>\n<\/ul>\n<p data-start=\"1810\" data-end=\"2098\">These requirements affect not only the financing structure but also tax-related factors. The specific terms of a shareholder loan\u2014in particular, the interest rate, term, seniority, and collateral\u2014are regularly subject to transfer pricing analysis.<\/p>\n<p data-start=\"2100\" data-end=\"2452\">In practice, this means that the structuring of shareholder loans must comply with both the requirements of Section 240 of the German Investment Fund Act (KAGB) and the arm\u2019s-length principle. Consistent documentation\u2014for example, as part of a transfer pricing study\u2014thus becomes an integral part of fund structuring.<\/p>\n<h2 data-section-id=\"13w3y82\" data-start=\"2459\" data-end=\"2523\">Shareholder Loans as a Tool for Fund Structuring<\/h2>\n<p data-start=\"2525\" data-end=\"2720\">Shareholder loans are a key tool for managing cash flows within a real estate fund and also play an important role in tax optimization.<\/p>\n<p data-start=\"2722\" data-end=\"3045\">Choosing between equity and debt can result in different tax implications. In particular, interest payments on shareholder loans\u2014subject to national regulations such as interest deductibility limits or anti-hybrid rules\u2014may be tax-deductible at the level of the investment company.<\/p>\n<p data-start=\"3047\" data-end=\"3103\">This opens up new opportunities for fund managers:<\/p>\n<ul data-start=\"3104\" data-end=\"3302\">\n<li data-section-id=\"wj9ps4\" data-start=\"3104\" data-end=\"3162\">Optimization of the Tax Burden at the Property Level<\/li>\n<li data-section-id=\"rdqaxc\" data-start=\"3163\" data-end=\"3236\">Targeted allocation of income within international structures<\/li>\n<li data-section-id=\"1ukq9pd\" data-start=\"3237\" data-end=\"3302\">Management of Cash Flows Between the Fund and the Property Company<\/li>\n<\/ul>\n<p data-start=\"3304\" data-end=\"3590\">At the same time, this requires careful alignment with the regulatory requirements of Section 240 of the KAGB. The amount and structure of shareholder loans must be determined in such a way that both regulatory limits are complied with and tax objectives are achieved.<\/p>\n<p data-start=\"3592\" data-end=\"3893\">In cross-border structures, it is also necessary to take into account different tax regimes, withholding taxes, and double taxation treaties. Shareholder loans are often used in such cases as a tool to combine tax efficiency with capital flexibility.<\/p>\n<p data-start=\"3939\" data-end=\"4079\">The requirement for \u201csufficient collateral\u201d under Section 240(1)(3) of the KAGB is relevant not only from a regulatory perspective but also from a tax perspective.<\/p>\n<p data-start=\"4081\" data-end=\"4409\">From a tax perspective, the key question is to what extent collateral affects the arm\u2019s-length nature of the loan. For example, an unsecured or subordinated loan may result in a higher interest rate, while substantial collateral tends to lead to lower interest rates.<\/p>\n<p data-start=\"4411\" data-end=\"4579\">For fund managers, this means that collateralization cannot be viewed in isolation. Rather, it is part of a comprehensive assessment that includes the following aspects:<\/p>\n<ul data-start=\"4580\" data-end=\"4757\">\n<li data-section-id=\"iohc6s\" data-start=\"4580\" data-end=\"4645\">economic function of the loan within the structure<\/li>\n<li data-section-id=\"1n12n9r\" data-start=\"4646\" data-end=\"4704\">Risk Allocation Between the Fund and the Property Company<\/li>\n<li data-section-id=\"bymag4\" data-start=\"4705\" data-end=\"4757\">Tax Recognition of Loan Terms<\/li>\n<\/ul>\n<p data-start=\"4759\" data-end=\"5064\">In practice, therefore, collateral structures are chosen that are both sufficient from a regulatory standpoint and reasonable from a tax perspective. In addition to traditional collateral, these include structural elements such as subordination clauses or cash flow-based repayment mechanisms.<\/p>\n<p data-start=\"5066\" data-end=\"5230\">A consistent transfer pricing study takes these factors into account and uses them to determine an appropriate interest rate and a market-based loan structure.<\/p>\n<h2 data-section-id=\"1hfjtyd\" data-start=\"5237\" data-end=\"5306\">Loan Limits and Their Significance for the Financing Structure<\/h2>\n<p data-start=\"5308\" data-end=\"5481\">The limits on shareholder loans set forth in \u00a7 240(2) of the KAGB affect not only regulatory admissibility but also tax structuring. The amount of the shareholder loan is a key determining factor:<\/p>\n<ul data-start=\"5541\" data-end=\"5737\">\n<li data-section-id=\"uvh0fm\" data-start=\"5541\" data-end=\"5619\">the debt-to-equity ratio at the level of the property company<\/li>\n<li data-section-id=\"z5543o\" data-start=\"5620\" data-end=\"5667\">the amount of deductible interest expenses<\/li>\n<li data-section-id=\"1vd7wqg\" data-start=\"5668\" data-end=\"5737\">the distribution of taxable income within the structure<\/li>\n<\/ul>\n<p data-start=\"5739\" data-end=\"6072\">In practice, these factors must be considered together. A loan-to-value ratio that is too low may result in tax optimization opportunities not being fully realized. Conversely, a ratio that is too high may violate regulatory limits or trigger tax risks (e.g., with regard to thin capitalization rules).<\/p>\n<p data-start=\"6074\" data-end=\"6364\">For fund managers, this means that the capital structure must be modeled during the acquisition phase, taking into account Section 240 of the German Investment Fund Act (KAGB) and the relevant tax framework. Scenario analyses are often used in this process to compare different financing options.<\/p>\n<p data-start=\"6429\" data-end=\"6546\">The distinction between shareholder loans and third-party financing is also significant from a tax perspective. While bank loans are typically granted on arm\u2019s-length terms and thus generally comply with the arm\u2019s-length principle, shareholder loans are subject to a separate review. Section 240(3) of the KAGB extends the scope of application to certain third-party financing if such financing is economically attributable to the fund.<\/p>\n<p data-start=\"6884\" data-end=\"7076\">For fund managers, this raises the question of how to structure financing arrangements so that they can be clearly classified from both a regulatory and a tax perspective. This applies in particular to:<\/p>\n<ul data-start=\"7077\" data-end=\"7207\">\n<li data-section-id=\"7xckcq\" data-start=\"7077\" data-end=\"7128\">Loan Agreements and Structured Finance<\/li>\n<li data-section-id=\"1jcmakw\" data-start=\"7129\" data-end=\"7170\">Guarantees or sureties provided by the fund<\/li>\n<li data-section-id=\"1lfp2xg\" data-start=\"7171\" data-end=\"7207\">hybrid financing instruments<\/li>\n<\/ul>\n<p data-start=\"7209\" data-end=\"7445\">This clear distinction is relevant not only for compliance with loan limits, but also for the tax treatment of the financing, for example with regard to interest deductions and withholding tax.<\/p>\n<h3 data-section-id=\"gmiwt3\" data-start=\"244\" data-end=\"316\">Use Case: Acquisition of a core property through a special-purpose vehicle<\/h3>\n<p data-start=\"213\" data-end=\"421\">An open-ended special-purpose fund is acquiring a core office property in a German Class A city through a wholly-owned subsidiary. The goal is to generate stable cash flow while maintaining an efficient capital structure.<\/p>\n<p data-start=\"423\" data-end=\"668\">The financing is structured as a combination of bank loans, equity, and shareholder loans. The latter serves, in particular, to fine-tune the capital structure to balance regulatory requirements and tax optimization.<\/p>\n<p data-start=\"670\" data-end=\"733\">The following aspects will be taken into account during implementation:<\/p>\n<ul>\n<li data-start=\"735\" data-end=\"1148\">The permissible amount of the shareholder loan is initially determined in accordance with the provisions of Section 240(2) of the KAGB. This involves close coordination between the valuation of the property\u2019s fair market value and the planned financing structure to ensure that regulatory limits are adhered to while leaving sufficient leeway for efficient capital allocation.<\/li>\n<li data-start=\"1150\" data-end=\"1536\">Based on this, the specific loan arrangement is structured. This includes, in particular, defining the term, seniority, and repayment mechanisms. The goal is to create a structure that is both regulatory compliant and aligned with the operational requirements of fund management, for example with regard to planned refinancings or exit scenarios.<\/li>\n<li data-start=\"1538\" data-end=\"2042\">Another key component is the definition of adequate collateral within the meaning of Section 240(1)(3) of the KAGB. This is structured taking into account the full ownership interest in the property company as well as the existing bank financing. In practice, this is often achieved through a combination of structural security features and contractual obligations that ensure sufficient protection without unnecessarily restricting the flexibility of the financing.<\/li>\n<li data-start=\"2044\" data-end=\"2350\">At the same time, a transfer pricing study is prepared to determine the interest rate on the shareholder loan, taking into account market conditions, the risk profile, and the loan structure. This ensures that the terms are both tax-compliant and consistently documented.<\/li>\n<\/ul>\n<p data-start=\"2352\" data-end=\"2522\">The chosen structure allows for the efficient integration of regulatory requirements and tax optimization while maintaining a high degree of operational flexibility.<\/p>\n<h3 data-section-id=\"ghezqv\" data-start=\"2529\" data-end=\"2603\">Use Case: Value-Add Strategy with Tax-Optimized Follow-On Financing<\/h3>\n<p data-start=\"2605\" data-end=\"2852\">A fund pursues a value-add strategy and acquires a property in need of repositioning. During the holding period, additional investment needs arise, such as for modernization measures or to improve the leasing situation.<\/p>\n<p data-start=\"2854\" data-end=\"2961\">Instead of a capital increase, these measures will be financed through a shareholder loan.<\/p>\n<p data-start=\"2963\" data-end=\"3234\">Funds are allocated in such a way that they can be flexibly adjusted to reflect the progress of the measures. This enables needs-based financing without structural changes at the corporate level, while also reducing transaction costs.<\/p>\n<p data-start=\"3236\" data-end=\"3591\">The terms of the loan will be structured to reflect the increased risk profile during the development phase. This applies in particular to the interest rate, the seniority relative to existing financing, and the term structure. The goal is to consistently reflect the economic risk in the loan terms.<\/p>\n<p data-start=\"3593\" data-end=\"3903\">At the same time, this ensures that the loan terms are recognized for tax purposes. To this end, the existing transfer pricing documentation will be updated to reflect the changed circumstances\u2014in particular, the increased risk and the changed capital structure.<\/p>\n<p data-start=\"3905\" data-end=\"4259\">The structure is also subject to ongoing regulatory oversight. The additional loans will be integrated into the existing financing structure and reviewed in light of the limits set forth in Section 240 of the KAGB. This applies both to the absolute amount of the loans and to their ratio to the current property value, which may change as a result of the measures.<\/p>\n<p data-start=\"4261\" data-end=\"4425\">The combination of flexible financing, tax documentation, and regulatory oversight enables the efficient implementation of the value-add strategy.<\/p>\n<h2 data-section-id=\"6ghjr7\" data-start=\"132\" data-end=\"168\">Implications for Real Estate Fund Management<\/h2>\n<p data-start=\"253\" data-end=\"670\">For fund managers, the combination of Section 240 of the German Investment Fund Act (KAGB), tax requirements, and operational cash flow structures results in an integrated governance framework that shapes the entire fund architecture. In this context, shareholder loans should not be viewed in isolation as a financing instrument, but rather as part of a system that integrates regulatory, tax, and economic aspects.<\/p>\n<p data-start=\"672\" data-end=\"1188\">In practice, this first requires close coordination between the regulatory framework and tax optimization. The terms of shareholder loans\u2014particularly with regard to amount, interest rate, term, and collateral\u2014must comply with the requirements of Section 240 of the German Investment Code (KAGB) and also meet arm\u2019s-length standards. At the same time, it must be ensured that the structure is consistent with the actual economic circumstances, particularly the property\u2019s cash flows.<\/p>\n<p data-start=\"1190\" data-end=\"1675\">A key factor here is the property company\u2019s ability to service the shareholder loan from its operating income. The property\u2019s operating cash flows\u2014after deducting operating expenses, maintenance costs, asset management costs, and senior financing obligations, particularly bank loans\u2014are decisive. In many structures, the shareholder loan is intentionally structured as subordinated debt, meaning that its servicing depends on available liquidity.<\/p>\n<p data-start=\"1677\" data-end=\"1956\">Against this backdrop, the option of deferral plays an important role. If current cash flows are insufficient to cover interest or principal payments, the shareholder loan can be adjusted flexibly as needed. This can be done, for example, by:<\/p>\n<ul data-start=\"1957\" data-end=\"2060\">\n<li data-section-id=\"15qbodx\" data-start=\"1957\" data-end=\"1999\">Temporary suspension of interest payments<\/li>\n<li data-section-id=\"n9ujl4\" data-start=\"2000\" data-end=\"2030\">Capitalization of Interest<\/li>\n<li data-section-id=\"urupu4\" data-start=\"2031\" data-end=\"2060\">Extension of the Term<\/li>\n<\/ul>\n<p data-start=\"2062\" data-end=\"2319\">take place. Such flexibility is not only economically sound, but must also be clearly reflected in the transfer pricing documentation, as it influences the risk assessment and thus the appropriateness of the rate of return.<\/p>\n<p data-start=\"2321\" data-end=\"2660\">Another relevant aspect is the collateralization of shareholder loans, particularly in the form of so-called upstream collateral. In this context, the investment vehicle provides collateral in favor of its shareholder\u2014that is, the fund. This can take the form of, for example, real property liens, assignments of rental receivables, or attachments of bank accounts.<\/p>\n<p data-start=\"2662\" data-end=\"3009\">However, such structures must be reviewed not only from a regulatory perspective under Section 240 of the KAGB, but also with regard to capital maintenance provisions under corporate law. These provisions serve to protect the company\u2019s restricted assets and are intended to prevent assets from being improperly returned to shareholders.<\/p>\n<p data-start=\"3011\" data-end=\"3062\">In the context of upstream collateral, this means:<\/p>\n<p data-start=\"3064\" data-end=\"3278\">The provision of collateral in favor of a shareholder must not jeopardize the company\u2019s assets necessary to maintain its share capital. In particular, it must be determined whether:<\/p>\n<ul data-start=\"3279\" data-end=\"3446\">\n<li data-section-id=\"p4urwb\" data-start=\"3279\" data-end=\"3340\">the company has sufficient available assets<\/li>\n<li data-section-id=\"tsoeas\" data-start=\"3341\" data-end=\"3402\">the security arrangement withstands third-party scrutiny<\/li>\n<li data-section-id=\"b6uvc9\" data-start=\"3403\" data-end=\"3446\">there is adequate consideration<\/li>\n<\/ul>\n<p data-start=\"3448\" data-end=\"3708\">In practice, this is often addressed through what is known as \u201climitation language\u201d in security agreements. This ensures that the collateral is provided only to the extent permitted by law and that there is no violation of capital maintenance requirements.<\/p>\n<p data-start=\"3710\" data-end=\"4154\">In addition, ongoing monitoring of financing structures is required. Changes in property values, adjustments to bank financing, or operational developments at the property level can have a direct impact on the regulatory classification under Section 240 of the KAGB as well as on the tax valuation. Fund managers must therefore be able to continuously analyze these developments and respond in a structured manner.<\/p>\n<p data-start=\"4156\" data-end=\"4560\">Another key component is the preparation and maintenance of transfer pricing documentation. The actual execution of the loan relationship\u2014including any deferrals, adjustments, or security arrangements\u2014must be consistent with the original documentation or updated accordingly. This is the only way to ensure tax recognition in the long term.<\/p>\n<p data-start=\"4562\" data-end=\"4994\">Ultimately, the integration of financing, tax planning, and asset management is of crucial importance. Decisions regarding investments, leasing strategies, or exit timing have a direct impact on the property company\u2019s cash flow situation and, consequently, on its ability to service shareholder loans. Conversely, the structure of the loans influences the fund\u2019s ability to make distributions and its rate of return.<\/p>\n<p data-start=\"4996\" data-end=\"5305\" data-is-last-node=\"\" data-is-only-node=\"\">Against this backdrop, shareholder loans are becoming a key control mechanism within the fund\u2019s structure. They integrate operational cash flows, regulatory requirements, and tax objectives, enabling fund management to manage these aspects in a coordinated manner.<\/p>","protected":false},"excerpt":{"rendered":"<p>Wichtiger Hinweis Diese Inhalte stellen weder eine steuerliche noch eine rechtliche Beratung dar. Sie dienen ausschlie\u00dflich allgemeinen Informationszwecken und k\u00f6nnen eine individuelle Beratung durch qualifizierte Steuer-, Rechtsberater:innen nicht ersetzen. Die Finanzierung von Immobilien \u00fcber Fondsstrukturen erfolgt regelm\u00e4\u00dfig \u00fcber zwischengeschaltete Immobilien-Gesellschaften. F\u00fcr Fondsmanager stellt sich dabei nicht nur die Frage, in welcher Form Kapital bereitgestellt wird, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1086,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[65,32],"tags":[68,84,88,90,76,75,81,69,72,66,67,86,70,87,73,89,71,74,77,79,78,85,91,80,82,83],"class_list":["post-1085","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fondsmanagement","category-structuring","tag--240-kagb","tag-besicherung-darlehen","tag-cashflow-immobilien","tag-core-immobilien","tag-fondsmanagement","tag-fondsstrukturierung","tag-fremdvergleich","tag-gesellschafterdarlehen","tag-immobilienfinanzierung","tag-immobilienfonds","tag-immobilienfonds-struktur","tag-kapitalerhaltung","tag-kapitalverwaltungsgesellschaft","tag-liquiditatssteuerung","tag-objektgesellschaft","tag-refinanzierung","tag-service-kvg","tag-sondervermogen-immobilien","tag-steueroptimierung-immobilienfonds","tag-transfer-price-study","tag-transfer-pricing","tag-upstream-sicherheiten","tag-value-add-strategie","tag-verrechnungspreise","tag-zinsabzugsfahigkeit","tag-zinsschranke"],"acf":[],"_links":{"self":[{"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/posts\/1085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/comments?post=1085"}],"version-history":[{"count":12,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/posts\/1085\/revisions"}],"predecessor-version":[{"id":1115,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/posts\/1085\/revisions\/1115"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/media\/1086"}],"wp:attachment":[{"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/media?parent=1085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/categories?post=1085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/realestate-advisory.de\/en\/wp-json\/wp\/v2\/tags?post=1085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}