Retrospective extension of the two-year speculative disposal period for real estate: compatibility with legitimate expectations

The Federal Constitutional Court (Second Senate, First Chamber) dismissed the constitutional complaint as inadmissible and unfounded, thereby upholding the validity of the challenged tax provision and allowing the respondent's position to prevail. The dispute concerned a taxpayer’s challenge to the retrospective extension of the speculative disposal period (*Spekulationsfrist*) for real estate from two to ten years, arguing it violated the constitutional principle of legitimate expectations. The Court held that the extension, enacted under the Tax Relief Act 1999/2000/2002, is compatible with constitutional law because the legislative change was already in force when the previous two-year period had not yet expired for the specific property at issue. The decisive legal basis rests on the interpretation of § 23(1) Sentence 1 No. 1 of the Income Tax Act (*EStG*) in light of the doctrine of legitimate expectations (*Vertrauensschutz*), as previously established by the Second Senate in its decision dated July 7, 2010 (2 BvL 14/02, 2/04, 13/05).