Austria: Property purchase contract: Real estate transfer tax on inventory sold at the same time?

 

When drafting purchase contracts, a contract draftsman must always deal with the desire of the contracting parties to draft contracts that are as tax-optimized as possible. In this context, it should be mentioned that in Austria, inventory is generally not covered by real estate transfer tax.

Inventory refers to movable objects that are located in a property but are not firmly attached to it (such as tables, chairs, beds, televisions, carpets, pictures, and the like).

To ensure that these items are not subject to real estate transfer tax, the following must be observed:

• The inventory must be clearly identifiable, for example in a detailed inventory list that is attached to a purchase contract; and movable (which does not apply to accessories, since in case of doubt these share the legal fate of the main item).
• The purchase price for the inventory must be clearly stated separately from the purchase price of the property in the purchase contract.
• The division of the purchase price between the property and the inventory must be plausible and customary in the market; an inflated valuation can be objected to by the tax office and lead to a subsequent tax prescription.

In its decision RV/7101546/2019 of 3.5.2023, the Federal Finance Court (BFG) had to deal with the question of whether the partial amount of the total purchase price – valued at 10% of the total purchase price – assessed at 10% of the total purchase price – according to the parties' agreement as attributable to the "inventory" is part of the consideration and is therefore subject to real estate transfer tax. In the present case, the inventory was recorded in an inventory list. These were built-in cupboards, furniture custom-made by carpenters, sliding glass doors, washbasins, bathtubs, toilets, a built-in safe, instantaneous water heater, alarm system centre, etc.

Whether furniture and furnishings are to be regarded as accessories of a property must be assessed according to the circumstances of the individual case. In the present case, the authority took the view that the specific inventory list only listed items that were to be regarded as accessories according to their objective intended purpose. In doing so, she referred to earlier decisions of the Supreme Court, according to which bathroom, toilet and kitchen facilities and the like obviously serve not only the individual needs of the respective owner, but also the continued use of the apartment itself. Thus, it is not the physical possibility of separability that matters, but the economic expediency.

In the opinion of the BFG, according to the inventory list, the items sold at the same time did not constitute inventory, but rather accessories of the property, which, in case of doubt, shared the fate of the main action and were therefore subject to real estate transfer tax.

We will be happy to advise you on the drafting of your contract!

 

For further information, please contact:

Petra Walkner, Lawyer

Zumtobel & Kronberger, Salzburg

e: walkner@eulaw.at

t: +43 662 624500

 

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