All questions

Real estate ownership

i Planning

Austrian building law provisions, such as zoning laws and construction regulations, differ between each of the nine federal provinces (and in certain instances even the respective communities within these provinces), are quite strict and the approval process may have to be carried out under different authorities. The requirements for planning permission vary according to the envisaged location as every Austrian federal province has enacted its own building, planning and zoning laws. In some provinces a simple notification to the planning authority suffices for certain types of buildings, while in others a formal building permit has to be obtained in the course of an administrative procedure (which in some cases includes the participation of the direct neighbours). Additionally, federal laws have to be obeyed and permissions under these laws may have to be obtained (e.g., under heritage protection laws, air traffic safety laws, forest protection laws).

The protection and development of historic and cultural buildings is governed by the Austrian Heritage Law, which is administered by the Federal Heritage Commission. Subsidiary rules might apply from provincial heritage laws, which differ between each of Austria's nine federal provinces. An existing heritage protection of real estate may generally be seen from the publicly available land register.

ii Environment

As a general rule, a 'polluter pays' principle applies to environmental clean ups: whoever causes pollution is primarily responsible for the cleaning up and the associated cost. In certain instances, the owner of a polluted land plot and his or her legal successor may also be held liable in the second degree, mainly if they agreed to, or tolerated, the pollution.

No particular environmental disclosure obligations apply to real estate sales in Austria. Austrian case law assumes a fraudulent intent of the seller, however, if information was withheld to the potential purchaser that would otherwise typically be disclosed or could reasonably be expected to be disclosed in fair business dealings.

iii Tax

Typically, the following taxes could become payable in connection with real estate transactions.

Real estate transfer tax

The acquisition of Austrian real estate as well as the consolidation of more than 95 per cent of the shares in a company owning Austrian real estate in the hand of a single shareholder are generally subject to Austrian real estate transfer tax. The taxable base for the determination is the value of the consideration (i.e., as a rule the purchase price) or the true value of the real estate in case the purchase price is lower. The real estate transfer tax generally amounts to 3.5 per cent in case of an asset deal and to 0.5 per cent in case of the consolidation of more than 95 per cent of shares in a company. Also, transfers without consideration (donations) are subject to the real estate transfer tax under application of a progressive tax rate ranging from 0.5 to 3.5 per cent.

Real estate profit tax

The profit from the sale of the real estate is subject to a real estate profit tax, which is generally subject to a flat tax of 30 per cent provided that a flat tax rate of 25 per cent applies to all profits generated by profits from corporate entities (including from the sale of real estate).

Registration fees

In addition to the real estate transfer tax, a registration fee for entering the right of ownership in the land register amounting to 1.1 per cent of the consideration or market value of the property is incurred. For the registration of mortgages, an additional 1.2 per cent of the mortgage amount needs to be paid.

VAT

Real estate transactions are generally not subject to VAT. The selling party, if an entrepreneur, may opt to treat the sale of real estate as VAT taxable subject to a 20 per cent tax rate. An entrepreneur would typically take this option into consideration if it has reclaimed input tax within the past 10 years regarding the real estate (which would otherwise have to be refunded).

Stamp duties

The execution of a purchase agreement and the contemplated acquisition of real estate generally no longer triggers stamp duty.

iv Finance and security

Generally, real estate financing is provided by banks via loans. Restrictions on who may provide financing in relation to real estate transactions mainly stem from banking regulations that restrictively regulate the commercial granting of loans (including within groups). Typically, mortgages serve as collateral for real estate financings. In case of share deals, pledges over the shares of the borrower, pledge of movables, accounts pledges, assignments of receivables or rights under any major contracts are also considered. To create a mortgage, pledgor and pledgee need to execute a mortgage agreement in writing with the signatures being notarised. Generally, both fixed amount mortgages (securing a specific amount) as well as maximum amount mortgages (which may be recurrently used under a specific relationship) are possible under Austrian law. The mortgage is only established upon its registration with the land register.