The Austrian Tax Reform 2015/16 has not yet been adopted by the Austrian Parliament, it is, however, widely discussed as it will also have an impact on property transfers:
Property transfer tax
The acquisition of real estate in Austria triggers property transfer tax (Grunderwerbsteuer). The tax rate is generally 3.5% of the consideration paid. Donations of properties are also subject to property transfer tax, however, the tax base is three times the assessed tax value (Einheitswert) which is much lower than the fair value of the property. Furthermore, in case of donation to relatives (i.e. family as defined by the law) a preferential tax rate of 2% applies.
Pursuant to the draft proposal, as of 1 January 2016 all property tax positions shall be assessed on the basis of the consideration paid, but at least from the fair value (market value) – hence in case of donations, the tax base shall no longer be three times the assessed tax value, but also the fair value. However, in order to minimize the drastic increase of the tax base in case of donations, the tax rate shall be scaled as follows for transfers without consideration:
- for the first EUR 250.000 0.5 %
- for the next EUR 150.000 2.0 %
- beyond 3.5 %
Further, property transfer tax shall also apply to companies owning a property if at least 95% of the company's assets are transferred to a new shareholder.
As of 1 January 2016, company shares conveyed in trust will be attributed to the trustor.
Real Estate Income Tax
Income generated from the sale of privately owned land acquired after 1 April 2002 are subject to Real Estate Income Tax (Immobilienertragssteuer). This tax was introduced in 2012 and shall be increased from 25% to 30% as of 1 January 2016. The existing inflation discount (2% per year, but no more than 50% of the profit) will no longer be applicable.
This increase in Real Estate income tax applies to all real estate for private persons, whether they are private assets or business assets, however, does not apply to corporations (they have to pay 25% corporation tax (Körperschaftssteuer)) or to private foundations (25% interim tax).
Should a private real estate sale result in a loss, 60% of it can be offset against rental income.