Austria’s Updated RETT Rules: What Shareholders and Real Estate Investors Need to Know

On Monday, 30 June 2025, the Budget Accompanying Act 2025 (Budgetbegleitgesetz 2025, BBG 2025), including, among other things, significant amendments to the Austrian Real Estate Transfer Tax Act (Grunderwerbsteuergesetz, GrEStG), was published. 

The amendments bring certain indirect transfers of Austrian real estate effected through share deals within the scope of Austrian Real Estate Transfer Tax (RETT), and introduce specific (stricter) regulations applicable to so-called "real estate companies". While the reforms aim to close existing loopholes and ensure more effective taxation of share deals involving Austrian real estate, they are also expected to have significant implications for M&A transactions involving Austrian real estate assets. 

Extension of Existing RETT Charge for Direct Shareholder Changes

Under former law, Austrian RETT at a tax rate of 0.5% of the property value was triggered by the direct transfer of at least 95% of:

• the interests in real estate-owning partnerships (e.g., general partnerships (offene Gesellschaft, OG) or limited partnerships (Kommanditgesellschaft, KG)) to new partners within an observation period of five years, or 
• the shares in real estate-owning corporations (e.g., Austrian stock companies (Aktiengesellschaft, AG) or Austrian limited liability companies (Gesellschaft mit beschränkter Haftung, GmbH)) to new shareholders at any time. 

The new rules reduce the relevant threshold to 75%, extend the observation period to seven years, and make it equally applicable to transfers of shares in corporations. However, transfers of publicly traded shares are disregarded for these purposes. 

According to former law, the tax liability in the event of a change in ownership of partnerships lay with the partnership and of corporations with the acquirer of the shares. Under the new law, in case of direct changes in the ownership of legal entities, the tax liability lies with the respective legal entity. 

The new 75% threshold aligns with the concept of a blocking minority in Austrian corporate law and is designed to prevent deliberately keeping hold of minority shares in real estate-owning companies to avoid RETT ("RETT blockers").

New RETT Charge for Indirect Shareholder Changes

Prior to the introduction of the BBG 2025, the scope of Austrian RETT did not include indirect transfers of shares in a real estate-owning entity (contrary to similar taxes in e.g., Germany). 

From now on, Austrian RETT is triggered if 75% of the shares in a real estate-owning entity are directly or indirectly unified within the hands of one acquirer or an "acquirer-group" (Erwerbergruppe). This could happen if, e.g., the shares in a real estate-owning company are not directly transferred but shares in a company higher up in the ownership chain are. An "acquirer-group" can be assumed when either partnerships and/or corporations are combined for economic purposes under uniform management, or are directly or indirectly under the controlling influence of a single (natural or legal) person. 

In addition, the relevant participation levels for the 75% threshold must be determined through a multiplicative calculation of shareholdings across each level of the ownership chain. Furthermore, it is foreseen that the person – whether an individual or corporate group – in whose hands the shares are unified is the person liable for Austrian RETT (for multiple unifications see below). The tax rate remains at 0.5% of the property value of the real estate-owning entity. If the same transaction meets the requirements for both a direct and an indirect shareholder change, only the direct shareholder change shall be taxable. If the same transaction meets the requirements for multiple indirect shareholder changes (i.e., if there is unification of shares on several corporate levels), only the indirect shareholder change that is closest to the real estate-owning company shall be taxable. 

An exemption to these new (indirect unification) rules with respect to intra-group transfers based on the Austrian Reorganisation Tax Act (Umgründungssteuergesetz, UmgrStG) is implemented. In such intra-group scenarios, no Austrian RETT is triggered as long as the parties involved in the reorganisation belong to the same "acquirer-group".

Stricter Rules Ahead for “real estate companies”

A "real estate company" is defined as a company whose primary business activity is the sale, rental, or management of real estate, and which engages in little or no other commercial activities. Hence, the majority of a real estate company’s assets or income derives from the underlying real estate. Real estate that is used by a company itself for its own business purposes – e.g., as a production site instead of leasing it out to third parties – does not lead to the classification of the company as a real estate company.

Going forward, if a unification of shares (Anteilsvereinigung), a change of shareholders (Gesellschafterwechsel), or a corporate reorganisation (Umgründungsvorgang) occurs in a "real estate company", the tax rate is 3.5% of the fair market value of the real estate, instead of the previously applicable 0.5% of the (typically significantly lower) property value.

Effective Date

The changes apply to transactions for which Austrian RETT may arise after 30 June 2025.

Notably, the mere enactment of the amendments does not, in itself, trigger Austrian RETT (e.g., existing ownership structures exceeding the 75% threshold do not trigger Austrian RETT). However, direct or indirect shareholdings of more than 75% that have not yet triggered a taxable share unification under the former rules may be subject to Austrian RETT as a result of share transfers after 30 June 2025, unless such shareholdings are reduced to below 75%. This means that, e.g., a reduction of an indirect shareholding from 90% to 76% after 30 June 2025 would trigger Austrian RETT. In structures where a unification of shares already exists as of 30 June 2025 and Austrian RETT has been paid, future share transfers reducing the shareholding to below 75% (as long as no other person acquires 75% of the shares) are not subject to Austrian RETT again. Consequently, a "freezing" effect may be assumed for existing ownership structures exceeding the 75% threshold but still below 95%, provided that Austrian RETT has not already been triggered, as any change that would result in a shareholding of one acquirer of at least 75% of the shares (irrespective of the percentile of shares the acquirer held before) would be taxable. In addition, a specific transitional rule with respect to existing trustee-held shares is included.

If you would like to discuss any of the points raised in this blog post in further detail, please contact the authors or your usual Freshfields contact.