VwGH on the tax liability of a purchase price annuity in the divorce case

In the context of a consensual divorce, two spouses had entered into an agreement regarding the maintenance obligations and the division of property. An immovable property purchased jointly as an investment was to pass into the woman’s sole ownership, with the woman having to pay a monthly maintenance allowance. If a property is transferred by means of a pension deemed appropriate, a tax-significant consideration allowance is present. However, if a pension is paid that cannot be classified as an appropriate consideration allowance, a voluntary gift or a maintenance allowance must be assumed; this is not relevant from a tax perspective. Usually, divisions in the divorce agreement are to be classified as free of charge, since payments are exclusively or predominantly related to the former family relationship or its property settlement.

In the specific case (VwGH GZ Ra 2022/13/0103 of 28 June 2023), however, the woman’s pension payment was calculated exactly at half of the property value. In addition, a actuarial expert opinion on the cash value of the pension obligation was obtained. In the year in which the payments first exceeded the capitalized value of the pension obligation, the woman claimed the payments as special expenses or advertising costs. The VwGH held that compensation payments under the Marriage Act are usually not based on performance and consideration, but are allocated to the family sphere. If the allocation is made in accordance with § 83 of the Marriage Act, there is no sale or acquisition. Such compensation payments between spouses are not regularly set as exact consideration, since the distribution takes place on the basis of fairness, such as in the form of maintenance payments, participation in the acquisition and management of the common household, care and upbringing of the children, etc. However, since in the specific case the amount of the pension (the cash value of the purchase price pension) was precisely compared to the value of half the house using actuarial expertise, it cannot be assumed based on the facts that the distribution or payments were determined for family-related reasons.

Since the exchange of services and goods was the main focus of the case, the VwGH therefore subsumed the pension as a tax-relevant purchase price pension. In this context, the important factor was the compensation payment that was calculated in a foreign currency and commercially reasonable manner. The VwGH emphasized that the decision would have been different if the pension payment had also covered the husband’s maintenance claims. Therefore, a significant purchase price pension in terms of remuneration could be assumed from a tax perspective. The former spouse was thus able to deduct the pension payments from income tax as special expenses under § 18, paragraph 1, letter a), EStG, or as advertising expenses under § 16, paragraph 1, letter a), EStG, as soon as the sum of the payments exceeded the consideration (the capitalised value of the recurring payments). However, in the case of the former spouse, the reverse was the case: there was a basis for disposal. Thus, under the regime of the real estate income tax, upon acquisition of new property, a taxable real estate sale would be assumed, for which the special tax rate of 30 % under § 30a, paragraph 4, EStG cannot be applied due to the ongoing pension payment under § 30a, paragraph 4, EStG. Therefore, the sale would be subject to taxation under the tariff as soon as the payments received exceed the acquisition and production costs for the property that are attributable to it.

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