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TAX & BUSINESS
Changes to the Real Estate Transfer Tax – Introduction of a Re‑zoning Surcharge
The National Council has approved the extension of the real estate transfer tax liability and the introduction of a re‑zoning surcharge. The new rules will take effect from 1 July 2025.
Real estate transfer tax (Grunderwerbsteuer, GrESt)
A central focus in the area of real estate transfer tax is the equal treatment of asset deals and share deals in transactions involving partnerships and corporations that hold domestic land as assets. In a share deal, shares in a company are transferred, whereas in an asset deal individual assets such as land are sold.
For partnerships, real estate transfer tax currently applies when, within five years, 95 % of the partnership interests are transferred to new partners. This rule has been extended to corporations and the period has been increased from five years to seven years.
At present, a share deal also triggers real estate transfer tax when at least 95 % of the shares in a land‑holding company are consolidated in one hand. In the future this threshold will be reduced to 75 %. Indirect acquisitions of shares in land‑holding companies can also trigger real estate transfer tax. To determine the indirect participation level, the percentage holdings at each level are multiplied together. If the calculation yields an indirect participation of 75 % or more, a taxable event arises. In the future the definition of “consolidation in one hand” will no longer consider the corporate group; instead it will focus on the acquiring group. Exceptions are provided for restructurings within a corporate group.
Increase of the tax rate and the assessment base
Another point is the increase of the tax rate and the assessment base for share transfers and reorganisations involving real‑estate companies. Real‑estate companies are companies whose main activity is the sale, leasing and management of land. The real estate transfer tax on transactions of such companies will be raised from 0.5 % of the land value to 3.5 % of the market value (= fair value) and increased. For non‑real‑estate companies the real estate transfer tax remains unchanged at 0.5 % of the land value. Exempt from the increase are land‑holding companies where all participating shareholders before and after a share transfer/merger (or reorganisation) belong to the privileged group (family association).
Re‑zoning surcharge on real‑estate income tax (ImmoESt)
In the future, capital gains on disposals will be taxed at a higher rate under the real‑estate income tax (ImmoESt) when land has been re‑zoned, for example from greenfield to building land. Gains from the disposal of re‑zoned land and soil (but not of buildings) will be subject to a 30 % re‑zoning surcharge. The re‑zoning surcharge is only taken into account to the extent that the sum of the capital gain and the surcharge does not exceed the disposal proceeds (capped). The new rule applies to disposals after 30 June 2025, provided the re‑zoning took place after 31 December 2024.
A central focus in the area of real estate transfer tax is the equal treatment of asset deals and share deals in transactions involving partnerships and corporations that hold domestic land as assets. In a share deal, shares in a company are transferred, whereas in an asset deal individual assets such as land are sold.
For partnerships, real estate transfer tax currently applies when, within five years, 95 % of the partnership interests are transferred to new partners. This rule has been extended to corporations and the period has been increased from five years to seven years.
At present, a share deal also triggers real estate transfer tax when at least 95 % of the shares in a land‑holding company are consolidated in one hand. In the future this threshold will be reduced to 75 %. Indirect acquisitions of shares in land‑holding companies can also trigger real estate transfer tax. To determine the indirect participation level, the percentage holdings at each level are multiplied together. If the calculation yields an indirect participation of 75 % or more, a taxable event arises. In the future the definition of “consolidation in one hand” will no longer consider the corporate group; instead it will focus on the acquiring group. Exceptions are provided for restructurings within a corporate group.
Increase of the tax rate and the assessment base
Another point is the increase of the tax rate and the assessment base for share transfers and reorganisations involving real‑estate companies. Real‑estate companies are companies whose main activity is the sale, leasing and management of land. The real estate transfer tax on transactions of such companies will be raised from 0.5 % of the land value to 3.5 % of the market value (= fair value) and increased. For non‑real‑estate companies the real estate transfer tax remains unchanged at 0.5 % of the land value. Exempt from the increase are land‑holding companies where all participating shareholders before and after a share transfer/merger (or reorganisation) belong to the privileged group (family association).
Re‑zoning surcharge on real‑estate income tax (ImmoESt)
In the future, capital gains on disposals will be taxed at a higher rate under the real‑estate income tax (ImmoESt) when land has been re‑zoned, for example from greenfield to building land. Gains from the disposal of re‑zoned land and soil (but not of buildings) will be subject to a 30 % re‑zoning surcharge. The re‑zoning surcharge is only taken into account to the extent that the sum of the capital gain and the surcharge does not exceed the disposal proceeds (capped). The new rule applies to disposals after 30 June 2025, provided the re‑zoning took place after 31 December 2024.