Under Austrian tax law, not only the transfer of Austrian real estate, but also the transfer or consolidation of 95% of the shares in a property-owning company, triggers a 0.5 % Austrian real estate transfer tax. The tax basis will essentially be the value of the underlying real estate. Such tax burden is equally triggered if at least 95 % of the shares in a property owning company are acquired or owned by corporations which are part of a tax group for Austrian corporate income tax purposes.
In addition, the law deems any shares held in trust to be allocated for purposes of Austrian real estate transfer tax, directly to the trustor, thereby denying the recognition of a trustee's interposition. As a result, a mere trustee structure may not avoid Austrian real estate transfer tax.
Indirect changes in shareholder structure
According to the prevailing view in Austrian tax literature prior to the Austrian Tax Reform Act of 2015 ("ATRA") coming into effect (prior to 2016), an indirect change in the shareholder structure of a property-owning company should not trigger Austrian real estate transfer tax. Such view was based on a decision of the Austrian Supreme Tax Court from 1984. Such view was explicitly upheld by the Austrian legislator in the reports on the legislative initiative covering ATRA, which introduced, inter alia, the relevance of trustee structures for Austrian real estate transfer tax purposes, as well as the decrease of the threshold for the tax triggering event of consolidation of shares in a property-owning company from 100 % to 95 %.
Nevertheless, from a recent published statement by a representative of the Austrian Ministry of Finance the view can be derived that under specific circumstances one may argue that an indirect share transfer of a property-owning company may trigger Austrian real estate tax. Since currently there are no official statements available from the Austrian Ministry of Finance as to whether indirect share transfers may be seen as a tax-triggering event or not, increased caution has to be observed in any share deal scenarios involving Austrian property-owning companies. This is not only relevant for third party deals, but may also affect mere intra-group transactions.
We would be delighted to assist you in planning your transaction, equipping you with a tailor-made solution and efficient arguments aimed at avoiding an Austrian real estate transfer tax burden.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.