Is an Established Model for Real Estate Transactions Now Malpractice?

By Ayla Ilicali & Nicole Waldhauser

In a recent decision¹, the Independent Finance Board Innsbruck (Unabhängiger Finanzsenat) questions a well-established practice for reducing taxes related to real estate transactions. Until the Highest Administrative Court (Verwaltungsgerichtshof) issues a final decision (not expected for at least two years), parties to real estate transactions will not have legal certainty and will need to act with caution when drafting agreements.

The transfer of land in Austria entails a land transfer tax (Grunderwerbsteuer) of 3.5%² and a registration fee (Eintragungsgebühr) payable to the competent District Court of 1%. The basis for calculation is the purchase price including any other benefits, such as an assumption of debts. If the transfer is free, the calculation basis is the assessed tax value (Einheitswert).