NEW REGULATION OF REAL ESTATE TRANSFER TAX: much stricter rules planned from July 2025

On 2nd May 2025, the draft bill for the Budget Accompanying Act 2025 was published in Austria. It provides for a significant tightening of the Austrian real estate transfer tax for share deals.

Currently, Austrian real estate transfer tax is triggered by the merger or transfer of at least 95% of the shares in land-owning companies. In future, this threshold will be reduced to 75%. This means that the acquisition or merger of 75% of the shares already triggers real estate transfer tax.

Partnerships are also subject to their own regulations in the Real Estate Transfer Tax Act, as the transfer of 95% of the shares to a new shareholder within five years triggers real estate transfer tax. In addition to lowering the threshold value to 75%, this threshold value for partnerships now also applies to corporations. The deadline has been extended from five to seven years.

Taxable mergers of shares can also take place by merging the shares of an individual or a partnership: A partnership exists if partnerships and corporations are combined for economic purposes under uniform management or are directly or indirectly under the controlling influence of one person. Therefore, the consolidation of all shares within a tax group is no longer relevant.

A significant increase in the tax rate and a change in the assessment basis for property companies were also proposed. In future, a real estate transfer tax of 3.5% of the market value will be levied on share mergers, changes of shareholders or reorganisations in connection with a real estate company, with certain exceptions. A real estate company is essentially defined as a company that specialises in the sale, letting or management of real estate.

In future, indirect share transfers will also be subject to tax in order to prevent circumvention through the use of intermediate companies. Currently, only direct share transfers are subject to real estate transfer tax. This means that indirect share transfers in higher-level ownership chains will also be subject to tax. The ownership structure is determined by multiplying the ownership shares at each level.

The transfer of shares in corporations is not subject to real estate transfer tax if the shares in question are traded on a stock exchange. The definitions in Section 1, Article 2 and Article 10 of the Stock Exchange Act 2018 are relevant here. This tax exemption clause is necessary due to the lack of traceability of share transfers within the stock exchange market.

All of the above changes to real estate transfer tax are expected to come into force on 1st July 2025 and will apply to transfers for which a tax liability arises after 30th June 2025.

(c) Picture Jakub Żerdzicki on Unsplash