Tax newsletter: Austria — April 2014

The most recent draft of the Austrian Budget Accompanying Act of 2014 (Budgetbegleitgesetz, BudBG 2014) provides for, inter alia, a calculation basis for the real-estate transfer tax (RETT) in compliance with the Austrian federal constitution as from 1 June 2014. The main issues of the intended new regulation are presented in the following.

Austrian RETT is basically based on the consideration paid to acquire real property. In case of gratuitous transfers, the tax basis currently amounts to the value of the real property. The value of a real property is therefore essential especially in connection with donations, inheritances or in the case of sale of shares in real property companies. The value of a real property in the meaning of the provisions of the Austrian Real Estate Transfer Tax Act (Grunderwerbsteuergesetz, GrEStG) is yet not the market value, but the — onefold or threefold — so-called standard tax value (Einheitswert), which is usually much lower than the fair market value (usually between 0.1 per cent and 10 per cent of the fair market value).

The Austrian Constitutional Supreme Court (Verfassungsgerichtshof, VfGH) set aside the hitherto applicable regulation regarding the valuation of real property with effect from 1 June 2014 due to unconstitutionality. If the old regulation is not replaced by a new one before this date, the fair market value will be considered for the calculation of the value of a real property thereafter…

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