Real estate transfer tax

The acquisition of ownership of real estate in Austria is subject to real estate transfer tax. Ownership can be acquired in the following ways:

• by a legal transaction (e.g. purchase, gift, exchange);
• without a legal transaction (e.g. inheritance, compulsory portion, adverse possession); or

through so-called "interim acquisition" (e.g. the transfer of a claim arising from a purchase agreement, i.e. without an entry in the land register).

The transfer of the beneficial ownership of a property is also subject to real estate transfer tax. In this case, no ownership is acquired under civil law, but the acquiring person obtains a position of power similar to that of an owner under civil law. In particular, beneficial ownership exists if the person can decide independently on the use of the real estate (e.g. a trustor).

Real estate transfer tax is payable in the event of a change of partner of:

• a partnership or corporation respectively cooperative that owns real estate,
• if, within seven years,
• at least 75 percent of the shares in the company’s assets or of the company are transferred to new partners.

The tax liability is triggered by the acquisition transaction through which at least 75 percent of the shares have changed hands within the last seven years. Thereafter, the period starts to run again from the time of the next transfer of shares.

The following situation is subject to real estate transfer tax:

• the consolidation of at least 75 percent of the directly or indirectly held shares
• in a partnership or corporation respectively cooperative that owns real estate
• in the hands of an acquirer or – if this is not the case – a group of acquirers.
  An acquirer group exists if acquirers are combined for economic purposes under uniform management or are directly or indirectly under the controlling influence of one person due to shareholdings or otherwise (group).

The event of a change of partners takes precedence over that of a consolidation of shares.

Consideration is the sum of everything that an acquiring person spends to obtain real estate. In particular, this consists of:

• the purchase price, including VAT;
• any performance fee;
• the assumption of debt (loans, credit);
• the rights reserved for the seller (right of residence, usufruct);
• payments to third parties (e.g. the costs of drawing up a contract, if an obligation has been assumed by the seller); and
• the highest bid.

The property value must be used as the tax base in the following situations:

• if there is no consideration, or if the consideration is less than the property value (gratuitous acquisition transaction);
• transfers within the family (spouses or registered partners; cohabiting partners who share or shared a primary residence; stepchildren, adopted children or foster children, or their children; parents, grandparents or great-grandparents; siblings; nieces or nephews; relatives by marriage, in the direct line);
• acquisition as a result of death (inheritance, compulsory portion, legacy);
• a change of partners, a consolidation of shares or a restructuring under the Restructuring Tax Act (Umgründungssteuergesetz, UmgrStG), provided the property is not part of the assets of a real estate company.

If agricultural or forestry land is transferred, the property value is not applicable. The unit value must be used for these types of real estate.

In the case of agricultural or forestry land, the unit value must be used as the tax base in the following situations:

• if there is no consideration or the consideration is less than the unit value (gratuitous acquisition transaction)
• transfers within the family (spouses or registered partners; cohabiting partners who share or shared a primary residence; stepchildren, adopted children or foster children, or their children; parents, grandparents or great-grandparents; siblings; nieces or nephews; relatives by marriage, in the direct line);
• acquisition within the family as a result of death (inheritance, compulsory portion, legacy);
• a change of partners, a consolidation of shares or a restructuring under the Restructuring Tax Act (Umgründungssteuergesetz, UmgrStG), provided the property is not part of the assets of a real estate company.

The fair market value:

• can be used as the tax base if the proven market value of the real estate is lower than the property value; and
• must be used as the tax base for a change of partners, a consolidation of shares or a restructuring under the Restructuring Tax Act (Umgründungssteuergesetz, UmgrStG), provided the property is part of the assets of a real estate company.
  A real estate company exists if the main focus of the company is the sale, letting or management of real estate. The existence of a real estate company is to be assessed on the basis of the criteria
  • "use of the properties not for own business purposes" and
  • "the predominant existence of income from sale, letting and leasing".

The fair market value can be proven in various ways, for example by

• a valuation report,
• the purchase price if the property was purchased not long ago,
• the purchase price of comparable properties or
• the value according to a bank estimate if a mortgage loan was taken out.

This evidence is generally subject to the free assessment of evidence by the authority. If a valuation report (expert opinion within the meaning of the Liegenschaftsbewertungsgesetz) is prepared by a generally sworn and court-certified real estate expert, the expert opinion is presumed to be correct.

This exemption provides for an allowance of 900.000 Euro for gratuitous and partially gratuitous acquisition transactions. The following conditions must also be met:

• the acquiring person is a natural person;
• the assets to be transferred (business, co-businesspersons’ shares) are used for business income (commercial operations, self-employment);
• the transferring person is no longer able to continue their business due to death, age (55 years of age) or incapacity for work (physical, psychological or cognitive functional impairment); and
• the transferring person must transfer at least a quarter of the business (business, co-businesspersons’ shares) (aliquot allowance).

The business allowance may only be deducted from the gratuitous part of the transaction. It must therefore be aliquoted accordingly for partially gratuitous transactions. Business transfers within the family are always gratuitous.

In addition, the real estate transfer tax, which is calculated according to the sliding scale for gratuitous transactions or for the gratuitous part of a partially gratuitous transaction, is capped at 0.5 percent of the pro rata property value.

This allowance is the equivalent of the business allowance for gratuitous transactions in agriculture and forestry. The amount of the allowance is 365.000 Euro. The following conditions must be met:

• the acquiring person is a natural person;
• the assets to be transferred (business, co-businesspersons’ shares) are used to generate agricultural and forestry income;
• the transferring person is no longer able to continue their business due to death, age (55 years of age) or incapacity for work (physical, psychological or cognitive functional impairment); and

the transferring person must transfer at least a quarter of the business (business, co-businesspersons’ shares) (aliquot allowance).

Agricultural and forestry plots that are transferred as a result of amalgamation or reparcelling procedures are exempt. Amalgamation and reparcelling procedures must comply with the objectives of the Flurverfassungs-Grundsatzgesetz. The competent agricultural authority will decide whether the conditions are fulfilled by means of a decision. Tax Authority Austria is bound by the legally binding decision of the agricultural authority.