Published on and written by Cyril Jarnias
Moving abroad often sparks the desire to “solidify” your life plan by buying property. Austria, with its economic stability, exceptionally high quality of life, and a real estate market known for its safety, is attracting more and more expatriates. But investing in real estate in Austria isn’t just about spotting a nice apartment in Vienna or a chalet in Innsbruck: the country combines a very protective legal framework, technical tax rules, and different regulations for residents and non-residents.
This guide provides a practical overview of the key aspects to know before buying, owning, or selling real estate in Austria. It specifically addresses taxation (rental income, capital gains, international treaties, corporate structures), ancillary costs, different ownership structures, as well as important distinctions between tax residents and non-residents.
Understanding the Austrian Tax Framework as an Expatriate
Before talking about bricks and square meters, you need to understand how Austria views you as a taxpayer. Here, it all starts with the concept of tax residence.
An individual is considered an Austrian tax resident if they have a permanent home available in the country or if their stay is, in fact, not temporary. In practice, staying more than 183 days in a calendar year almost always leads to tax residency. Nationality does not matter. Conversely, a non-resident is only taxed in Austria on their Austrian-source income.
This distinction is central to real estate:
– A resident is subject to unlimited taxation on their worldwide income, including rental income from abroad (with, where applicable, application of a tax treaty).
– A non-resident is subject to limited taxation only on Austrian-source income, for example, rental income from an apartment in Graz or capital gains from selling a property in Vienna.
Austria has signed double taxation agreements with over 90 countries, based on the OECD model. For an expatriate, these treaties determine whether real estate income is taxable in Austria, in the country of residence, or both with a tax credit. The country generally applies either the exemption with progression method (foreign income is considered for determining the tax rate but is not taxed in Austria) or the tax credit method (tax paid abroad is deducted, up to the theoretical Austrian tax amount).
To benefit from treaty advantages, you must provide proof of your tax residence via a “Ansässigkeitsbescheinigung” (residence certificate) issued by the Austrian authorities. This document is essential to reduce a foreign withholding tax or request a refund.
Income Tax Structure and the Role of Real Estate
Austria applies a progressive income tax rate schedule, with rates reaching up to 55% for the highest bracket. For 2024, the schedule (also used as a reference for other recent years) is as follows:
| Taxable annual income bracket (EUR) | Income tax rate |
|---|---|
| Up to 12,816 | 0% |
| 12,817 to 20,818 | 20% |
| 20,819 to 34,513 | 30% |
| 34,514 to 66,612 | 40% |
| 66,613 to 99,266 | 48% |
| 99,267 to 1,000,000 | 50% |
| Over 1,000,000 | 55% |
Real estate income (rental income) received by an individual falls under this progressive rate schedule, whether you are a resident (on your worldwide rental income) or a non-resident (only on Austrian rental income). However, real estate capital gains are treated differently: a specific flat tax of 30% applies in most cases, which simplifies decision-making.
Hypothetical amount added to the taxable income of non-residents to calculate their effective tax rate.
Another peculiarity: Austrians distinguish between “regular” income and “special” payments (13th and 14th-month salaries, bonuses…). Certain bonuses benefit from a more favorable regime, with an annual allowance followed by specific progressive rates. For an expatriate investor who is also an employee in Austria, these rules can influence their marginal rate and therefore their taxation on rental income.
Buying Property in Austria: Acquisition Tax and Ancillary Costs
Whether it’s an apartment in Vienna or a vacation home in Styria, acquiring real estate systematically triggers a real estate transfer tax and several mandatory fees.
The cornerstone is the real estate transfer tax, the Grunderwerbsteuer. In practice, for a standard purchase against payment:
– the standard rate is 3.5% of the value (usually the purchase price),
– reduced rates exist for certain intra-family transfers (tiered scheme at 0.5%, 2%, then 3.5%, with recent adjustments favoring transfers between close relatives).
In addition to the tax, a land register entry fee (Grundbuch) of 1.1% generally applies. However, a temporary measure suspends this fee for acquisitions intended as urgent primary residences, subject to conditions: the price must not exceed €500,000 (or €2 million for properties not considered luxury), the buyer must leave their previous home and actually occupy the new property for at least five years.
Court fees for the registration application are fixed (a modest amount, around fifty euros). However, notary or lawyer-notary fees, essential for drafting and authenticating the contract, represent a significant portion of the budget: often between 1.5% and 3% of the price, plus VAT.
For an expatriate buyer, the real estate agent’s commission, although regulated, represents a cost to budget for: it can be up to 3% of the purchase price, excluding VAT.
A summary table gives an idea of the main upfront costs (excluding any special permits for foreigners):
| Cost item (standard purchase) | Basis of calculation | Indicative range |
|---|---|---|
| Real estate transfer tax (Grunderwerbsteuer) | Price or property value | 3.5% |
| Land register entry fee (Grundbuch) | Price or value (except targeted exemption) | 1.1% |
| Notary / lawyer-notary fees | Property price | 1.5% – 3% + VAT |
| Agency commission (purchase) | Property price | Up to 3% + VAT |
| Mortgage registration (if loan) | Loan amount | Approx. 1.2% |
Overall, an expatriate should expect ancillary costs in the order of 8% to 15% of the price, depending on the complexity of the arrangement and advisory needs.
Also note: Austria applies a European-style VAT of 20% to most goods and services. Purchasing a new dwelling from a developer is generally subject to 20% VAT, but this can be reclaimed if the property is used for a VAT-taxable rental activity (a common scheme for certain professional rental investments).
Owning Property: Local Taxes and Ongoing Taxation
Once an owner, the expatriate encounters two distinct tax components: local taxation linked to property ownership, and taxation linked to income (rental income, unrealized capital gains).
On the local side, each municipality levies a property tax (Grundsteuer) on developed and undeveloped properties. This tax is based on a specific cadastral value – often significantly lower than the market value – to which a federal base rate of 0.2% applies. Municipalities can then apply a multiplier coefficient of up to 500%, meaning the maximum effective rate can reach 1% of the cadastral value. In practice, the amount remains moderate for most homes, and for an investor, this tax is deductible from taxable rental income.
In addition to property tax, owners must pay various local fees, such as those for water, waste, and possibly road maintenance. These amounts are generally included in the charges that can be recovered from the tenant.
On the social security front, real estate investment does not entail specific contributions, but if the expatriate works in Austria, they will pay social security contributions through their salary, including unemployment insurance (employee share around 2.95% of salary, adjusted based on income level).
Austria has no wealth tax or inheritance or gift tax (these were abolished in 2008). However, gifts exceeding certain thresholds (€15,000 over five years, or €50,000 per year between close relatives) must be declared to the authorities, under penalty of a fine of up to 10% of the value.
Renting Out in Austria as an Expatriate: Income, Expenses, and Tax Treaties
For an expatriate, one of the major advantages of Austrian real estate remains the stability of rental income and a particularly well-structured rental market: 43% of the population are tenants, and in a city like Vienna, nearly three-quarters of households rent long-term, often within a highly regulated framework. For an investor, this means low vacancy rates, but also strict rules to master.
Taxation of Rental Income for Individuals
Rental income received by an individual is treated as property income and subject to the progressive rate schedule. The country distinguishes between residents and non-residents:
– Resident: Austrian and foreign rental income declared, with possible application of a double taxation treaty,
– Non-resident: Only Austrian-source rental income is taxed.
Taxable income threshold in Austria above which non-residents must file a tax return.
Deductible expenses on rental income include notably: loan interest, management fees, repair and maintenance costs, local taxes, and insurance premiums.
– Property tax,
– Loan interest,
– Management fees (agency fees, property manager),
– Repairs and maintenance costs,
– Building depreciation (standard rule of 1.5% per year for residential property).
For a non-resident expatriate, it is essential to check the rules of the tax treaty between Austria and their country of residence. Generally, real estate income is taxable in the country where the property is located, i.e., Austria, but the state of residence takes this income into account for calculating its own average rate (exemption with progression) or grants a tax credit.
Double Taxation and Relief Procedures
Austrian double taxation treaties provide two main methods to avoid cascading taxation:
To avoid double taxation of rental income received in Austria, two main mechanisms apply: exemption with progression, where the Austrian income is exempt in the country of residence but used to calculate the tax rate on other income; and the tax credit method, where tax already paid in Austria is deducted from the tax due in the country of residence, up to the limit of the latter.
The expatriate must systematically declare their Austrian income in their Austrian tax return, even if this income benefits from an exemption under the treaty. In case of excessive withholding taxes (e.g., on certain interest or dividends related to a real estate structure), procedures exist to obtain a reduction “at source” or a subsequent refund, based on specific forms validated by the tax administration of the country of residence.
If double taxation persists despite the treaty, it is possible to initiate a Mutual Agreement Procedure (MAP) between tax authorities to find a concerted solution.
Real Estate Capital Gains: The Logic of the 30% Flat Tax
Since April 1, 2012, Austria has fundamentally overhauled the taxation of private real estate capital gains. The logic is simple: almost all sales of non-business properties, whether old or new, generate taxable income subject to a flat rate of 30%, with a few important exceptions.
The general principle for an individual is as follows:
For a property acquired after April 1, 2002, the taxable gain is the difference between the selling price and the acquisition price, after deducting certain costs (integrated purchase costs, non-deductible improvements), and is taxed at 30%. For a property acquired before this date, the taxpayer can sometimes opt for a flat-rate method: 14% of the selling price is then considered the gain, taxed at 30%, which equates to an effective charge of 4.2% of the sale price, particularly if the use of the property has not changed (no ‘re-dedication’).
Two exemption regimes are particularly relevant for an expatriate:
– The property is fully exempt if, between its acquisition and sale, it was used continuously as a principal residence for at least two years;
– It is also exempt if it was used as a principal residence for at least five consecutive years within the ten years preceding the sale.
In other words, an expatriate who buys their primary home in Vienna and sells it after several years of occupancy can exit without tax on the capital gain, provided these occupancy periods are met.
Losses incurred on the sale of real estate are not carried forward to subsequent years. They can only be deducted from real estate capital gains realized in the same calendar year.
For corporations, the logic is different: real estate capital gains are included in the profit and taxed at Corporate Income Tax (CIT) at a rate of 23% (24% in 2024, then 23% according to the announced reduction trajectory). It is no longer a separate flat tax, but an element of operating income.
Finally, an important point for expatriates leaving Austria: in case of a transfer of tax residence abroad, an exit tax may apply to certain assets, including real estate, when Austria loses its right to tax the future capital gain. The latent gain accumulated during the period of Austrian residence is then taxed as a capital gain, with possible deferral mechanisms to other EU/EEA states.
Investing via a Corporation or Structure: GmbH, Partnership, Foundation
An expatriate is not necessarily limited to a private purchase. Austria offers several vehicles for holding real estate: corporations, partnerships, private foundations, and even transparent real estate funds.
Corporations (GmbH, AG)
The most common form is the GmbH, a limited liability company. It is often the tool used for significant rental investments or development projects:
– the company pays corporate income tax on its real estate profits (rental income, capital gains) at 23%,
– dividends paid to individual shareholders are subject to a withholding tax (or taxation) of 27.5% as investment income.
The total economic taxation therefore combines CIT and distribution taxation, with possibilities for planning (e.g., capitalizing in the company for a long time, or investing through a foreign holding company benefiting from a treaty).
For an expatriate, investing via a GmbH offers advantages (separation of personal/business assets, limited liability, facilitating investor partnerships) but also costs (formation, accounting, reporting obligations).
Partnerships (OG, KG) and Tax Transparency
Standard partnerships – OG (general partnership) or KG (limited partnership) – are, for tax purposes, transparent. The partnership itself is not subject to income tax; it is the partners who bear the tax:
Individual partners are personally taxed on their share of profits, according to the progressive income tax rate schedule (0% to 55%). Corporate partners, on the other hand, are subject to Corporate Income Tax (CIT) on their share of profits.
For a pool of expatriates buying a property together, the KG is often used: a general partner (often a small GmbH) manages, and limited partners contribute capital with liability limited to their contribution. For tax purposes, each declares their share of the property income.
The tax residence of a partnership is determined by the place where important decisions are made, typically where the partners meet. If the structure owns property in Austria, this ownership generally creates a permanent establishment in Austria, subject to tax on the portion of profit attributable to the country.
Private Foundation and Foreign Trusts
Austria has a typical institution: the private foundation (Privatstiftung). It has no shareholders, only beneficiaries. It is considered non-transparent for tax purposes. From a real estate perspective:
Final tax rate on income distributed by the foundation, including interim tax and distribution tax.
For an expatriate seeking a tool for intergenerational wealth transfer or management, the private foundation can be interesting, but it requires highly specialized legal advice.
Foreign trusts are not recognized as such under domestic law; the tax authorities classify the structure on a case-by-case basis as transparent or not, depending on who effectively has control over the assets.
Real Estate Funds and REITs
Some expatriates prefer indirect real estate exposure through funds or quasi-REITs governed by the Immobilien-Investmentfonds-Gesetz. These vehicles are tax-transparent: unit holders are taxed on income and capital gains at 27.5% (individuals) or 23% (corporations) depending on their status.
Taxation rules vary depending on whether the fund is Austrian or foreign, registered or unrepresented. For unregistered funds, a flat-rate regime aims to tax 90% of the annual increase in value (with a minimum of 10% of the latest redemption price).
VAT, Rentals, and Property Use
For residential rentals, the standard regime provides for a reduced VAT rate of 10% on rent when the landlord is taxable and has opted for taxation. In practice, many private rentals remain outside the effective scope of VAT. However:
Commercial rentals are generally exempt from VAT, but the landlord can opt to subject them to 20% VAT under certain conditions, in order to reclaim VAT on their investments. Similarly, the sale of a building is in principle exempt, with an option to tax it at 20% in certain arrangements, which can be useful if the buyer is a taxable person who can deduct that VAT.
For an expatriate who buys a unit in a tourist residence, for example, the developer may structure the transaction with VAT on the price and recovery of that VAT on condition that the property is operated under a commercial rental regime. This type of arrangement requires accepting a genuine business activity logic (management contracts, minimum duration, reporting obligations).
Residents, Non-Residents, and Mobile Investors: International Interactions
Many expatriates maintain a tax foothold in their home country while investing in Austria, or vice versa. In this context, residence rules, treaties, and “exit tax” mechanisms on capital gains combine.
For individuals, capital gains on real estate securities (corporations, REITs, funds) and bonds are taxed at the flat rate of 27.5%. In case of a transfer of tax residence out of Austria, an exit tax may be applied on the unrealized capital gain, based on the market value at departure. Special provisions for a move to an EU/EEA country allow deferring this tax until the actual disposal of the assets.
Foreign investors are, in principle, subject to limited taxation on certain capital income from Austrian sources (interest, dividends, etc.), via withholding taxes at 25% (bank interest) or 27.5% (dividends). Tax treaties can reduce these rates, or even eliminate them for certain interest or royalty flows.
For an expatriate who holds a real estate portfolio through an Austrian company, these withholdings become crucial for calculating the net return on investment.
Beyond Taxes: Other Costs and Constraints to Factor In
Taxation isn’t everything. An expatriate investing in Austrian bricks and mortar must integrate several practical dimensions.
Contracts are written in German, and the legal system precisely distinguishes property statuses (primary residence, secondary residence, tourist accommodation). In the Alpine Länder (Tyrol, Salzburg, Vorarlberg), strict regulations, especially for non-EU/EEA nationals, apply to secondary and tourist residences, directly impacting the type of income possible.
Next, tenant protection: residential leases are regulated, often subject to the Mietrechtsgesetz (MRG), with mechanisms for rent caps, minimum durations, and strict termination rules. The investor must therefore adopt a “patient” return approach, rather than a speculative one.
Austrian banks generally require a minimum down payment of 20% (higher for non-residents), with a maximum loan term of 35 years and a debt-to-income ratio of around 40%. Interest rates, after peaking around 4%, show a trend towards stabilization and decline.
Finally, the presence of hidden costs (major maintenance, energy efficiency upgrades, high condominium fees in older buildings) can significantly erode net returns, especially in a country with many historic buildings. Conversely, recent, energy-efficient properties may benefit from subsidies and deduction advantages, and generally sell better.
How an Expatriate Can Structure Their Investment Smartly
Faced with this mosaic of rules, several major scenarios emerge for an expatriate.
Direct Purchase as a Private Individual
This is the most common scheme for an expatriate wanting to buy their home or a small rental property:
– Acquisition subject to Grunderwerbsteuer and registration fees,
– Rental income taxed at progressive rates, with deductions and depreciation,
– Capital gains taxed at 30% except for principal residence exemption,
– Interaction with the tax treaty of the home country.
This model is simple but can become tax-heavy if the investor scales up or remains highly taxed in another country.
Using a GmbH or KG Structure
For larger investments (buildings, portfolios), a company facilitates investor partnerships, financing, transfer, and risk management. A highly mobile expatriate can place their Austrian assets in a GmbH held by a foreign holding company, and leverage treaties to optimize dividend repatriation. Internally, the property is depreciated, and capital gains are included in profit at the CIT rate.
The Kommanditgesellschaft (KG) is an interesting legal structure for a group of individuals wishing to maintain tax transparency while pooling their resources. In this framework, each partner bears the tax on profits in their own country of residence, with international treaties applied to avoid double taxation.
Wealth Management Use: Private Foundation, Family Co-ownership
From a succession and transfer perspective, the private foundation or intra-family co-ownership schemes can be considered. The fact that there is no longer an inheritance tax or wealth tax in Austria provides flexibility, even if foundation entry taxes and distribution taxes frame these arrangements.
Specific Points of Vigilance for Expatriates
To conclude this overview, a few red lines deserve to be recalled for any expatriate wishing to invest in real estate in Austria:
Real estate investment in Austria involves several major risks. Tax residence can shift to worldwide taxation in case of prolonged stay or permanent accommodation. Double taxation treaties, to be studied case by case, determine the taxation of income. The technical rules for real estate capital gains and the varying regimes for secondary residences depending on the Länder require precise analysis. Strict rental law necessitates professional management. Finally, leaving the country can trigger an exit tax, requiring rigorous advance planning.
Investing in real estate in Austria as an expatriate therefore requires more preparation than a simple “love-at-first-sight” purchase. But for those willing to comply with this demanding framework, the country offers what many international investors are looking for: a robust rule of law, a tax system that is relatively clear once deciphered, and a real estate market that is slow but remarkably resilient.
In a volatile economic context, Austrian real estate, characterized by its slowness and institutionalized prudence, represents a strategic choice for expatriates seeking to build stable and sustainable wealth.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
