At first sight, participation in a German REIT (real estate investment trust) corporation may seem attractive to German corporations because G-REIT corporations are exempted from both trade tax and corporate income tax. However, this tax exemption is only of temporary nature. German REIT legislation provides for extensive subsequent taxation of REIT corporations’ profit distributions on the level of the shareholders. Such taxation could easily be avoided by interposing a foreign holding company. Therefore, Germany has extended its CFC legislation to cover such arrangements. Thomas Kollruss analyses the German CFC rules (Foreign Transactions Tax Act – Außensteuergesetz) with regard to indirect participations of German corporations in G-REIT corporations via interposed foreign holding companies.