Real estate transfer tax: shares held in trust - Supreme Administrative Court confirms abusive arrangement

Pursuant to § 1, paragraph 3 of the Real Estate Acquisition Tax Act, the association of all shares in a land-owning company owned by the acquirer, the land acquisition tax (GrESt). In practice, the GrESt Therefore, this often occurs when share transfers are made. avoided, that civilly not all shares transferred were, but one Small share civilly remained with the seller or was transferred to a third party who held this minority share in trust for the buyer. In KI 11/2010 we reported that the Universal Flash Storage Innsbruck (25.6.2010, RV/0226-I/09) in this common construction abusive design I have seen it.

The appeal against this decision has now been dismissed by the VwGH (5.4.2011, 2010/16/0168) and by the Supreme Court hence the UFS’s perspective in the specific case confirmed. This finding is also noteworthy in that the Previously (Supreme Court) Jurisprudence has been followed by a formally civil law approach and a Shareholding association only in case from Acquisition of property, However, in the case of other legal relationships with corresponding access to the minor share, it has not accepted this approach. While the current ruling generally upholds this legal principle, it also confirms the UFS’s view that in individual cases – if there are no justifiable reasons beyond control – a abusive design may be available.

In the specific case, the previous owner has transferred 99% of his shares in a restaurant business to his son and entered into a trust agreement for the remaining 1% share, under which the son can at any time exercise the right to assign the tiny share held by the father. The arguments presented in the proceedings non-taxation motives (higher trust among business partners if the father continues to appear as a co-partner in the company's books; the father's good reputation lasts longer) were considered not to be a determining factor overall for the chosen design and the Design as merely through the Intention to avoid taxes motivates respected.

The Reaction from the financial administration It remains to be seen. However, trust arrangements for share transfers are now undoubtedly subject to a Higher tax risk and should therefore only be chosen in cases where there are additional reasons beyond the control of the operator that justify the deviation.

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