May 2025 – On 2 May 2025, the Austrian Ministry of Finance published a draft bill of the Budget Accompanying Act proposing significant amendments to the Austrian Real Estate Transfer Tax Act with potential far-reaching implications for M&A transactions.
The proposed changes to the Real Estate Transfer Tax Act would tighten the tax treatment of so-called "share deals"—transactions where shares in corporations or partnerships owning real estate are transferred instead of the real estate itself. These changes, aligned with the Austrian government's 2025–2029 program, aim to close any existing loopholes that have enabled the avoidance of real estate transfer tax in real estate transactions.
Reduction of the ownership threshold
A main element of the proposed amendments is the reduction of the shareholding threshold in real estate-owning entities that triggers liability to real estate transfer tax. Currently set at 95%, the threshold would be lowered to 75%. In addition to lowering the threshold to 75%, the provision where real estate transfer tax is triggeredwhen shares are transferred to new shareholders within five years should now also apply to corporations and the period has been extended from five to seven years.
This amendment is designed to prevent the deliberate retention of minority holdings in real estate-owning entities ("RETT blockers") in order to circumvent real estate transfer tax. The 75% threshold reflects the level of shareholding at which a dominant influence over an entity is presumed under Austrian corporate law, thereby aligning the tax rules more closely with the principles of Austrian corporate law.
Inclusion of indirect share transfers
The proposed amendments also include indirect changes in ownership. This would ensure that changes in shareholding occurring through higher-tier parent or holding companies—rather than in the real estate-owning entity itself—would also be subject to real estate transfer tax. Relevant participation levels would be determined by multiplying the shareholding percentages across each level of the ownership chain. This approach significantly limits the effectiveness of using intermediate corporate structures in order to avoid real estate transfer tax. From the wording of the draft bill, it remains unclear to which shareholder level the new provisions concerning indirect changes in ownership would apply.
Stock market exemption
The draft bill introduces a so-called "stock exchange clause" that exempts share transfers in real estate-owning entities carried out via regulated securities exchanges from real estate transfer tax. This provision acknowledges the practical difficulties associated with tracking ownership changes in publicly traded entities and limits the application of real estate transfer tax in such contexts.
Redefinition of the taxpayer
Under the proposed amendments, in cases of share consolidation (where multiple shares are brought under one entity), the purchaser—whether an individual or corporate group—would always be considered as the tax debtor. Sellers would no longer bear tax liability for such transactions, thereby clarifying the attribution of tax responsibility.
Broader definition of concept of control
In an effort to prevent real estate transfer tax circumvention through contractual or group-related arrangements, the proposed amendments introduce a broadened definition of "control and economic unity". Real estate transfer tax liability would therefore arise not only when shareholdings are concentrated within a single legal entity, but also when a group of entities or individuals are subject to "uniform management or controlling influence", including through voting or syndicate agreements. These changes would align the tax rules with the concepts established under Austrian corporate law (§ 15 AktG, § 115 GmbHG), while also encompassing natural persons exerting de facto control.
Special rules for real estate companies
Under the proposed changes, special provisions would apply to companies classified as a "real estate company" (e.g., core business activity is the sale, lease, or holding of real estate, with minimal or no other business activity). For such real estate companies, the following would apply:
- the tax base is the fair market value of the real estate;
- a higher tax rate of 3.5% would apply to both share deals and reorganisations according to the Austrian Reorganisation Tax Act involving real estate companies.
Companies that use real estate actively in their business (e.g., production sites, office headquarters, etc.) should generally not fall under the scope of this rule.
Family transfers exception
To avoid unintended tax burdens on intra-family restructurings, the favourable property value-based tax and reduced rate would still apply to share transfers within the family circle (as defined in § 26a of the Court Fees Act)—provided that all shareholders involved are family members.
Reporting obligations
Legal representatives involved in share transactions that trigger real estate transfer tax liability would be expressly obliged to submit a tax return or perform a self-assessment under the proposed changes. Additionally, the Austrian Financial Market Authority must notify the tax office when 75% of voting rights in a listed company are acquired or sold.
Effective date
The proposed amendments should, if passed through the legislative process, enter into force on 1 July 2025 and apply to transactions where the tax liability arises after 30 June 2025. Most importantly, shareholding thresholds should be monitored over time in order to capture any delayed or stepwise ownership changes.
Key takeaways
The proposed amendments to the Austrian Real Estate Transfer Tax Act introduce significant legal changes aimed at closing real estate transfer tax loopholes, particularly in M&A transactions, such as share deals. Given the broad scope of changes, including the reduction in ownership thresholds, the inclusion of indirect changes in ownership, and the redefinition of key terms like "control and economic unity," it is crucial to understand now how these legal changes could affect any envisaged business transaction. As the amendments are set to take effect on 1 July 2025, it is imperative to assess current and planned M&A transactions involving real estate-owning entities in light of the new rules in order to optimise tax strategies and avoid any unforeseen real estate transfer tax liabilities.
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.
