Austria: real-estate transfer tax — new rules on the tax basis

The transfer of Austrian real estate triggers a 3.5 per cent (two per cent in case of intra-family transfers) Austrian real-estate transfer tax. In 2012, the Austrian Constitutional Court ruled that the provisions in the Austrian real-estate transfer tax on the tax basis are not in conformity with the country’s constitutional law. Shortly prior to the expiry of the transition period, new provisions for determining the tax base for Austrian real-estate transfer tax purposes entered into force as of 1 June 2014.

As a general rule, the consideration for the transfer of real estate serves as the tax basis for Austrian real-estate transfer tax purposes. However, in case there is no consideration (e.g. in case of a transfer mortis causa), if the consideration cannot be determined or if such consideration is lower than the real estate’s fair market value, then the prevailing fair market value of the property will be the basis for the Austrian real-estate transfer tax, thereby serving as some kind of minimum tax basis.

As a result, transfers of Austrian property effected without any compensation to a non-family member will trigger an increased real-estate transfer tax burden. This inter alia applies to the contribution of real estate by a shareholder to its subsidiary without effecting a capital increase…

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