Sale & Transfer of Austrian Real Estate

Direct sale of real estate

Resident individual

Capital gains

Capital gains on real property, in general, are taxable with 30%. Acquisition and improvement costs are deductible. The tax rate of 30% is not applicable if the real estate is qualified as a current asset. (i.e. if property is acquired for the purpose of being sold again and not for the purpose of being used). It is also possible to opt for the normal tax rate instead of being taxed with the special tax 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%.

VAT / transfer tax

As a general rule, the supply and lease of immovable property are exempt from VAT. However, it is also allowed to opt for VAT taxation in certain circumstances (20% VAT rate). In this case, there would be the possibility of input VAT deduction.

Transfer taxes apply to the acquisition of the legal or economic ownership of Austrian real estate and are usually payable by the purchaser. The value of the immovable property (Grundstückswert) or the value of the consideration (usually the purchase price) is the assessment basis for the transfer tax. The tariff varies from 0.5% (e.g. transfers without payment) up to 3.5%.

Losses

Losses from the sale of private real estate by individuals have to be reduced to 60% and can then be deducted from rental income only on a straight-line basis for 15 years. Upon request, the 60% loss can also be completely deducted at once from rental income in the year in which it arises. If the real estate is part of the business assets, its losses can be offset against other taxable income as well.

Non-resident individual

Non-resident individuals are treated in the same way as resident individuals.

Resident company

Capital gains

Profits of the sale of Austrian real estate are subject to Austrian corporate income tax as business income. Business income is taxed with a tax rate of 25% (24% in 2023 and 23% as of 2024 onwards).

The corporate income tax on capital gains is based on the difference between the net sales proceeds and the tax book value.

VAT/transfer taxes

The supply of real estate is generally exempt from VAT. However, it is also allowed to opt for VAT taxation in certain circumstances (20% VAT rate). In this case, there would be the possibility of input VAT deduction. Transfer taxes apply by the acquisition of the legal or economic ownership of Austrian real estate and is normally payable by the purchaser. The market value of the immovable property (Grundstückswert) or the value of the consideration is the assessment basis for the transfer tax. The tax rate varies from 0.5% (e.g. gifted shareholder properties or transfer due to corporate reorganisation) up to 3.5%.

Losses

The losses realised on the sale of the real estate may be offset against taxable income. A loss carry forward is possible.

Non-resident company

Non-resident companies are treated in the same way as resident companies as income generated from immovable property is taxable in Austria. The non-resident company is, therefore, limited taxable in Austria with the income generated in Austria.

 

Indirect sale

Resident individuals

Capital gains

Individuals who hold shares in an Austrian company derive capital income that is subject to 27.5% capital gains tax.

Transfer Tax

If at least 95% of the shares of a real estate company are transferred to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

Non-resident individual

Non-resident individuals are treated in the same way as resident individuals if the shareholder held at least 1% of the shares at any time within the past 5 years. However, the applicable double tax treaty has to be considered.

Resident company

Capital gains

Capital gains on the sale of Austrian real estate are subject to Austrian corporate income tax. Business profits are taxable with a tax rate of 25% (24% in 2023 and 23% as of 2024 onwards).

VAT/Transfer Tax

The supply of shares in a company is generally exempt from VAT.

If at least 95% of the shares of a real estate company are transferred to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

Losses

Losses arising from the sale of shares may be offset against profits.

Non-resident company

Non-resident companies are treated in the same way as resident companies. The regulations of the  applicable double tax treaty have to be considered.

 

Direct transfer intra concern (Austrian real estate company to Austrian real estate company)

Resident Company

Capital gains

Capital gains on the Austrian real estate are subject to Austrian corporate income tax. Business profits are taxable with a tax rate of 25% (24% in 2023 and 23% as of 2024 onwards).

VAT / Transfer tax

The supply of real estate is generally exempt from VAT. However, it may be possible to opt for VAT taxation (20% VAT rate). In this case, there would be the possibility of input VAT deduction.

The acquisition of Austrian real estate is subject to transfer taxes. The tax rate varies from 0.5% (e.g. contributions) up to 3.5%. The transfer tax is normally payable by the purchaser. The transfer tax is not deductible as business costs. However, it is part of the acquisition costs.

Group relief

Under Austrian law, it is possible to form a fiscal unity if the holding company owns more than 50% of the shares in its subsidiaries. Furthermore, it is possible to become a group member if a group member holds more than 50% of the shares in its subsidiaries. A fiscal unity can only be formed in case the holding company is resident in Austria. Non-resident corporations can also be part of the fiscal unity. The transfer of real estate within the fiscal unity is subject to corporate income tax. However, all income is taxable by the head of the group with 25% corporate income tax (24% in 2023 and 23% as of 2024 onwards).

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

If real estate is transferred to an Austrian company due to a reorganisation there will be no disclosure of hidden reserves, provided that the reorganisation tax law (Umgründungssteuergesetz) is applicable.

Non-resident company

Non-resident companies are treated in the same way as resident companies, since Austrian real estate held by a foreign company is considered to be a permanent establishment in Austria. It is also possible to form a fiscal unity with non-resident companies.

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax of a rate at 0.5%.

If Austria´s right to tax is limited due to the reorganisation hidden reserves are disclosed. If the limitation is towards an EU/EEA member state, the hidden reserves have to be paid in instalments for 5 years. However, if the limitation is towards non-EU/EEA member states the hidden reserves have to be paid immediately. The applicable double tax treaty has to be considered in order to check if there is a limitation in the Austrian taxation rights.

 

Indirect transfer intra concern (Austrian real estate to Austrian company)

Resident company

Capital gains

Capital gains due to the sales of shares of an Austrian company are subject to Austrian corporate income tax and, therefore, taxable with 25% corporate income tax (24% in 2023 and 23% as of 2024 onwards).

VAT / Transfer tax

The supply of shares in a company is generally exempt from VAT.

If at least 95% of the shares of a real estate company are transferred to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

Group relief

Under Austrian law, it is possible to form a fiscal unity if the holding company owns more than 50% of the shares in its subsidiaries. Furthermore, it is possible to become a group member if a group member holds more than 50% of the shares in its subsidiaries. A fiscal unity can only be formed in case the holding company is resident in Austria. The transfer of shares within the fiscal unity is subject to tax. However, all income is taxable by the head of the group with 25% corporate income tax (24% in 2023 and 23% as of 2024 onwards).

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

As the shares are transferred to an Austrian company due to a reorganisation there will be no disclosure of hidden reserves, provided that the reorganisation tax law (Umgründungssteuergesetz) is applicable.

Non-resident company

Non-resident companies are treated in the same way as resident companies as income generated from immovable property is taxable in Austria. The non-resident company is, therefore, limitedly taxable in Austria with the income generated in Austria.

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

If Austria´s right to tax is limited due to the reorganisation hidden reserves are disclosed. If the limitation is towards an EU/EEA member state, the hidden reserves must be paid in instalments for 5 years. However, if the limitation is towards non-EU/EEA member states the hidden reserves must be paid immediately. The applicable double tax treaty has to be considered in order to check if there is a limitation in the Austrian taxation rights.

 

Direct transfer intra concern (Austrian real estate to foreign company)

Resident company

Capital gains

Capital gains on the Austrian real estate are subject to Austrian corporate income tax. Business profits are taxable with a tax rate of 25% (24% in 2023 and 23% as of 2024 onwards).

VAT / Transfer tax

The supply of real estate is generally exempt from VAT. However, it may be possible to opt for VAT taxation in certain circumstances (20% VAT rate). In this case, there would be the possibility of input VAT deduction.

The acquisition of Austrian real estate is subject to transfer taxes. The tariff varies from 0.5% (e.g. transfers without payment) up to 3.5%. The transfer tax is normally payable by the purchaser. The transfer tax is not deductible as business costs. However, it is part of the acquisition costs.

Losses

The losses may be offset against other taxable Austrian income.

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

If Austria´s right to tax is limited due to the reorganisation hidden reserves are disclosed. If the limitation is towards an EU/EEA member state, the hidden reserves have to be paid in instalments for 5 years. However, if the limitation is towards non-EU/EEA member states the hidden reserves have to be paid immediately. The applicable double tax treaty has to be considered in order to check if there is a limitation in the Austrian taxation rights.

Non-resident company

Non-resident companies are treated in the same way as resident companies as income generated from immovable property is taxable in Austria. The non-resident company is, therefore, limited taxable in Austria with the income generated in Austria. However, it can be a member of the fiscal unity.

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

If Austria´s right to tax is limited due to the reorganisation hidden reserves are disclosed. If the limitation is towards an EU/EEA member state, the hidden reserves have to be paid in instalments for 5 years. However, if the limitation is towards non-EU/EEA member states the hidden reserves have to be paid immediately. The applicable double tax treaty has to be considered in order to check if there is a limitation in the Austrian taxation rights.

 

Indirect transfer intra concern (Austrian real estate company to foreign company)

Resident company

Capital gains

Capital gains on the Austrian real estate are subject to Austrian corporate income tax. Business profits are taxable with a tax rate of 25% (24% in 2023 and 23% as of 2024 onwards).

VAT / Transfer tax

The supply of shares in a company is generally exempt from VAT.

If at least 95% of the shares of a real estate company are transferred to new shareholders, the acquisition is subject to transfer tax. The fair value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a tax rate of 0.5%.

Losses

The losses may be offset against other taxable Austrian income.

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

If Austria´s right to tax is limited, due to the reorganisation, hidden reserves in the shares are disclosed. If the limitation is towards an EU/EEA member state, the hidden reserves must be paid in instalments for 5 years. However, if the limitation is towards non-EU/EEA member states the hidden reserves must be paid immediately. The applicable double tax treaty has to be considered in order to check if there is a limitation in the Austrian taxation rights.

Non-resident company

Non-resident companies are treated in the same way as resident companies as income generated from immovable property is taxable in Austria. The non-resident company is, therefore, limited taxable in Austria with the income generated in Austria. A Foreign company cannot form a fiscal unity for Austrian tax purposes. However, it can be a member of the group relief.

Reorganisations

If at least 95% of the shares of a real estate company are transferred due to reorganisations to new shareholders, the acquisition is subject to transfer tax. The market value of the immovable property (Grundstückswert) is the assessment basis for the transfer tax at a rate of 0.5%.

If Austria´s right to tax is limited due to the reorganisation hidden reserves are disclosed. If the limitation is towards an EU/EEA member state, the hidden reserves have to be paid in instalments for 5 years. However, if the limitation is towards non-EU/EEA member states the hidden reserves have to be paid immediately. The applicable double tax treaty has to be considered in order to check if there is a limitation in the Austrian taxation rights.

 

Transfer of Austrian real estate to an EU-company

Resident individual

Capital gains

Capital gains on real estate are taxable with 30%. Hereby, it is equal if the real estate is private property or a business asset. Acquisition and improvement costs are deductible. The tax rate of 30% is not applicable if the real estate is qualified as ‘current asset’ (i.e. if property is acquired for the purpose of being sold again and not for the purpose of being used). It is also possible to opt for the standard taxation instead of being taxed with the special tax 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%.

VAT / transfer tax

As a general rule, the supply and lease of immovable property is exempt from VAT.

Transfer taxes apply to the acquisition of the legal or economic ownership of Austrian real estate and are usually payable by the purchaser. The value of the immovable property or the value of the consideration is the assessment basis for the transfer tax. The tax rate varies from 0.5% (e.g. gifted of inherited properties) up to 3.5%.

Losses

Losses from the sale of private real estate by individuals have to be reduced to 60% and can then be deducted from rental income only on a straight-line basis for 15 years. Upon request, the 60% loss can also be completely deducted at once from rental income in the year in which it arises. If the real estate is part of the business assets, its losses can be offset against other taxable income as well.

Non-resident individual

Non-resident individuals are treated in the same way as resident individuals.

Resident company

Capital gains

Capital gains on the Austrian real estate are subject to Austrian corporate income tax. These business profits are taxable with a tax rate of 25% (24% in 2023 and 23% as of 2024 onwards).

VAT / Transfer tax

The supply of real estate is generally exempt from VAT. However, it may be possible to opt to VAT taxation in certain circumstances (20% VAT rate). In this case, there would be the possibility of input VAT deduction.

The acquisition of Austrian real estate is subject to transfer taxes. The tax rate varies from 0.5% (e.g. transfers without payment) up to 3.5%. The transfer tax is normally payable by the purchaser. The transfer tax is not deductible as business costs. However, it is part of the acquisition costs.

Losses

The losses may be offset against other taxable Austrian income.

Non-resident company

Non-resident companies are treated in the same way as resident companies as income generated from immovable property is taxable in Austria. The non-resident company is, therefore, limitedly taxable in Austria with the income generated in Austria.