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Austria Real Estate Tax Guide - Quick overview of Austrian Real Estate

Rental income and capital gains of Austrian real estate

Taxpayer

Basis of tax

Tax levied

Tax rates (2020)

Resident company

 

 

Non-Resident company

 

 

Resident individual

 

 

Non-resident individual

 

 

Rental income

Capital gains

 

Rental income

Capital gains

 

Rental income

Capital gains

 

Rental income

Capital gains

 

Corporate income tax

Corporate income tax

 

Corporate income tax

Corporate income tax

 

Individual income tax

Real estate profit tax

 

Individual income tax

Real estate profit tax

 

25%

25%

 

25%

25%

 

0 – 55%

30%

 

0 – 55%

30%

 

 

Rental income

Companies

Introduction

Rental income is taxed as business income.

Liability to tax

Rental income earned by companies is subject to corporate income tax as business income.

Basis to tax

Business income is subject to Austrian corporate income tax at the flat rate of 25%.

Individuals

Introduction

Rental income is taxed as part of a taxpayer’s annual income.

Liability to tax

Rental income received by individuals is subject to individual income tax.

Basis to tax

Generally, expenses may be deducted from rental earnings. Particular rules may apply to the depreciation of fixed assets and costs of refurbishment and maintenance. The taxable result will be taxed together with all of the taxable income at the individual tax rate.

Capital gains

Companies

Introduction

Real estate capital gains are taxed as business income.

Liability to tax

Real estate capital gains earned by companies are subject to corporate income tax as business income.

Basis to tax

Business income including all capital gains is subject to Austrian corporate income tax at a flat rate of 25%.

Individuals

Introduction

Real estate capital gains realised by individuals are taxed with a special tax rate as opposed to rental income.

Liability to tax

Real estate capital gains realised by individuals are subject to the special real estate profit tax of 30%. However, it is also possible to opt-out of this and tax the capital gains with the standard individual income tax rate.

Basis of tax

The difference between the acquisition costs and the sale price will be taxed at a flat rate of 30%. Alternatively, if the real estate was bought before 31.03.2002, the tax will be calculated based on 14% of the sale price, resulting in an effective tax rate of 4.2%.

Austrian VAT & transfer taxes

Taxpayer

Basis of tax

Tax levied

Tax rates (2019)

Resident company

 

 

Non-Resident company

 

 

Resident individual

 

 

Non-resident individual

 

 

Rental income

Transfer of real estate

 

Rental income

Transfer of real estate

 

Rental income

Transfer of real estate

 

Rental income

Transfer of real estate

 

Value-Added Tax

Value-Added Tax

 

Value-Added Tax

Value-Added Tax

 

Value-Added Tax

Value-Added Tax

 

Value-Added Tax

Value-Added Tax

 

0%/ 10% / 20%

0% / 20%

 

0%/ 10% / 20%

0% / 20%

 

0%/ 10% / 20%

0% / 20%

 

0%/ 10% / 20%

0% / 20%

 

 

 

Value-Added Tax

Companies

Introduction

Value-added tax (VAT) is a tax based on the increase in the value of a product or service at each stage of the supply chain.

Liability to tax

Rental income is subject to Austrian VAT if the rented object is located in Austria.

Basis of tax

As a general rule, rental income for business purposes is exempt from VAT. However, it is possible to opt-out of this exemption, in which case the VAT rate is 20%.

Rental income for residential purposes is always subject to 10% VAT.

Individuals

The same rules as for companies apply.

Transfer of Real Estate

Companies

Introduction

The selling of real estate is generally a VAT-able transaction if the property is located in Austria.

Liability to tax
The selling of real estate is generally tax-exempt. However, it is possible to opt-out of this exemption, in which case the VAT rate is 20%.

Individuals

The same rules as for companies apply.

Austrian local taxes

Taxpayer

Basis of tax

Tax levied

Tax rates

Resident company

 

Non-Resident company

 

Resident individual

 

Non-resident individual

 

Unit value*

 

Unit value

 

Unit value

 

Unit value

 

Property tax

 

Property tax

 

Property tax

 

Property tax

 

Depend on the municipality

Depend on the municipality

Depend on the municipality

Depend on the municipality

* This is a certain value for tax purposes which is determined by the authorities.

 

Introduction

Every municipality levies an annual property tax on Austrian real estate. This annual municipal tax is deductible from rental income.

Liability to tax

Every owner of residential or commercial buildings in Austria is liable to local property tax.

Basis of tax

The property tax is based on the unit value. This is a certain value for tax purposes that is determined by local authorities. In general, the tax rate is 0.1 – 0.2% annually. However, municipalities are allowed to increase the property tax by up to 500%, which results in a maximum tax rate of 1.0%.

Austrian net wealth/worth taxes

There is no net wealth/worth tax for individuals or companies owning real estate in Austria.

Vehicles for Austrian real estate

Commonly used vehicles for Austrian real estate

Limited

The so-called ‘GmbH’ (in German: Gesellschaft mit beschränkter Haftung) is the Austrian version of a limited liability company and is the most frequently used vehicle for the ownership of Austrian real estate. The amount of the contribution determines the share (Stammeinlage) of the shareholder. The shareholders of the GmbH are not personally liable for the business debt.

Individuals who hold shares in an Austrian company derive capital income that is subject to a 27.5% capital gains tax rate. Profits made by the GmbH itself are subject to the corporate income tax at a flat tax rate of 25%.

Partnership & joint ventures

Investments in real estate are also often done on a collective basis by some entities and/or individuals. For Austrian tax purposes, there is no distinction between the taxation of partnerships and of joint ventures.

Limited partnerships

A typical limited partnership is the KG (in German: Kommanditgesellschaft). The KG has at least a managing partner and a limited partner. The managing partner bears unlimited liability, while the limited partner is only liable with the amount of his contribution. In case all but one partner leaves the KG, the entity ceases to exist. The KG is treated as transparent for tax purposes and is therefore not subject to income tax. Partner individuals of a KG are subjected to a personal income tax, which ranges from 0% to 55% (see above); partner companies are subjected to corporate income tax.

General partnerships

A typical general partnership is the OG (in German: Offene Gesellschaft). The OG has at least two managing partners (individuals/companies) that are fully liable. A limitation of the liability is not possible. The OG is treated as transparent for tax purposes and is therefore not subject to income tax. Partner individuals of an OG are subjected to a personal income tax, which ranges from 0% to 55%, partner companies are subjected to corporate income tax.

Trusts
The trusts are legal instruments, which are not known as such in Austrian law and are, therefore, not particularly recognised in Austrian tax law. In order to qualify a foreign trust as transparent or non-transparent entity for Austrian income tax purposes, the Austrian tax authorities will generally ask which persons have legal and actual rights to dispose the trust’s assets, and who is able to make corresponding arrangements. If such rights or effective powers lay with a beneficiary or any other related person, it is quite likely that the income generated by the trust will be directly attributable to this person and the trust will be qualified as a transparent trust.

Private foundation (Privatstiftung)

The Austrian Privatstiftung has no shareholders, but only beneficiaries. It is treated as non-transparent for tax purposes. Free contributions to the Privatstiftung are taxable with a flat tax of 2.5% (Eingangssteuer). Interest from bank deposits, interest from bonds, income from capital gains as well as derivate and income from private sale of real estate are taxable with 25% Zwischensteuer. Rental income and profits of sales of real estate that are business assets are taxable with 25% corporate income tax. Contributions to beneficiaries are taxable with 27.5% capital gains tax. There will be a credit on the Zwischensteuer if contributions to beneficiaries are made, which results in a total tax liability of 27.5% of revenue generated and distributed to beneficiaries.

Foreign partnership

The residence of a partnership is determined by the place where crucial business decisions are usually made. Generally, this will be the place where all partners meet regularly.

In case a foreign partnership carries a permanent establishment in Austria, the partners are subject to Austrian personal income tax as corporate income. Austrian real estate will usually lead to a permanent establishment in Austria; however, this is not the only possibility.

Specific real estate vehicles for Austrian real estate

Real estate investment trusts

Real estate investment trusts are regulated by the real estate investment trust law (Immobilien-Investmentfonds-Gesetz), which regulates the profit determination and the taxation. An investment company owns the assets of the real estate investment trust as a trustee for the investors. A real estate investment trust is treated as transparent for tax purposes. Therefore, the beneficiaries of the trust are subject to capital gains tax of 27.5%. If the beneficiary is a corporation, the corporate income tax rate of 25% applies. The real estate investment trust can be used for a wide range of public investors (open trust) or only limited beneficiaries (closed trust).

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