Real Estate 2025 Comparisons

In Vienna, the main sources of real estate law are as follows.

• Austrian Civil Code (ABGB – Allgemeines Bürgerliches Gesetzbuch) – the primary source of private law in Austria, including real estate transactions. The ABGB governs contracts, property rights and land ownership. It sets out rules for the transfer of property, leases and other real estate matters.
• Land Register Act (GBG –Grundbuchgesetz) – regulates the Austrian land register, a central tool for recording property ownership, liens and other rights related to real estate. It is crucial for ensuring the clarity and security of property transactions in Austria.
• Austrian Tenancy Act (MRG – Mietrechtsgesetz) – regulates the relationship between landlords and tenants in Austria. It covers rent control, tenant protection, notice periods, and the rights and obligations of both parties regarding maintenance and repairs of rental properties. In Vienna, the MRG plays a central role in tenant protection and in setting the conditions for lease agreements.

Market Trends

Price adjustments

Residential property prices in Vienna have seen a decline. In Q4 2024, house prices decreased by 2.08% year-on-year, marking the seventh consecutive quarter of price falls – the longest streak since the 2000s.

Increased rental demand

The influx of new residents has sustained high demand for rental properties across all districts. Since 2016, apartment prices have risen by approximately 22.5%, maintaining Vienna’s position as the Austrian federal state with the highest average property prices.

Impact of Inflation and Interest Rates

High inflation and stricter lending guidelines have led to reduced purchasing power and financing challenges for potential buyers. This environment has resulted in a slight decline in the transaction volume of real estate purchases by 0.7%, amounting to EUR24.1 billion. This figure contrasts with EUR43 billion during the real estate boom in 2021, highlighting the market’s cooling effect under current economic conditions.

Adaptations to Emerging Trends

Technological innovations

The real estate sector is increasingly embracing technological advancements such as blockchain, decentralised finance (DeFi) and property technology (PropTech). These innovations are being integrated to enhance transaction transparency, streamline processes and introduce new financing models. However, the extent of their adoption varies, and stakeholders are navigating regulatory and operational challenges associated with these technologies.

Repurposing commercial spaces

There is a growing trend of converting commercial office spaces into residential units. This adaptation addresses the evolving needs of the population and optimises urban space utilisation. The success of such projects depends on factors like location, design and alignment with urban development plans.

Financing trends

Traditional bank financing remains prevalent, but alternative financing sources are gaining traction. Investors and developers are exploring options such as crowdfunding, private equity and real estate investment trusts (REITs) to fund projects, providing flexibility and access to capital, especially in a tightening credit environment.

ESG (Environmental, Social, Governance)

ESG principles have increasingly shaped Vienna’s real estate market. Developers and investors are prioritising green building standards, incorporating energy-efficient technologies and seeking green building certifications like LEED or BREEAM. There is a strong push towards decarbonisation, with many buildings being retrofitted for improved energy efficiency and the integration of renewable energy sources. Socially, developers are focusing on affordable housing and creating spaces that promote community engagement. Governance practices have become more transparent, with an emphasis on ethical management. Furthermore, financial institutions are offering green bonds and sustainable financing options, encouraging developers to align their projects with ESG criteria. These trends reflect a broader shift towards creating environmentally responsible, socially impactful and well-governed real estate developments.

In recent years, Austria has introduced several reforms impacting real estate investment, ownership and development, with a particular focus on sustainability and urban planning.

Green Building Incentives

The Austrian government has proposed significant changes to construction and real estate laws to promote investment in sustainable construction and environmentally friendly refurbishments. These reforms aim to enhance the value of “ecological” buildings and are expected to continue attracting foreign investment in the real estate sector.

Urban Development Plan 2025 (STEP 2025)

Vienna has revised its urban development plan, STEP 2025, to adapt to current requirements, including strategies for planning and assessing high-rise building projects. This plan aims to ensure Vienna’s innovative development in line with social, economic and ecological needs.

As part of STEP 2025, Vienna has introduced new regulations for high-rise buildings, providing guidelines for planning and assessing such projects. These regulations aim to manage urban growth effectively while maintaining the city’s character.

Ownership

Ownership (Eigentum) is the most comprehensive right one can have over a property, allowing the owner to fully control and use the property, including selling, leasing or altering it. Ownership rights are typically registered in the Land Register (Grundbuch).

Co-Ownership

Co-ownership (Miteigentum) occurs when multiple individuals share ownership of a property, each owning a defined portion of the property (eg, an apartment building where each owner holds a share of the common areas and individual apartments).

Condominium Ownership

Condominium ownership (Wohnungseigentum)allows individuals to own an apartment or unit within a building while sharing ownership of common areas such as hallways, the roof and courtyards with other owners. This form of property right is regulated by the Austrian Condominium Act (Wohnungseigentumsgesetz) and grants owners exclusive rights to their units, along with shared responsibility for the maintenance and management of common spaces.

In Austria, real estate ownership is primarily governed by the General Civil Code (ABGB) and the Land Register Act. Ownership is transferred through a notarised purchase agreement recorded in the land register. Additional rules apply to certain property types, with residential real estate subject to the Rent Act (MRG) and Condominium Act (WEG). Commercial properties face no special national laws but must comply with local zoning and building regulations. Hotel properties are additionally regulated by operating licence and safety requirements.

The legal and proper acquisition of ownership of a property is effected by means of a notarised purchase agreement and registration in the land registry. The land registry is a public register in which all properties and their rights, including ownership, are recorded. A transfer of ownership only becomes effective once it is recorded in the land registry, which is usually arranged by the buyer’s notary or lawyer. Land registry law is particularly important as it has public legal force and provides a reliable record of ownership. Title insurance is not widespread because the land registry system is considered to be highly reliable and potential legal problems with ownership are usually uncovered by a thorough due diligence investigation prior to purchase.

In Vienna, thorough due diligence is essential for secure real estate transactions. This includes:

• reviewing legal ownership and encumbrances via the Land Register;
• verifying compliance with zoning and building laws; and
• identifying outstanding liabilities such as taxes or utility bills.

Buyers must also account for additional costs, such as the 3.5% property transfer tax and 1.1% registration fee. A technical inspection assesses the property’s condition and environmental risks, particularly for historic or former industrial sites. Professional advice from agents, lawyers and surveyors is key to minimising risks. Buyers should also consider Vienna-specific factors like heritage protection laws and strict zoning regulations that may limit renovations or modifications.

In Vienna’s commercial real estate transactions, representations and warranties are critical components that allocate risk and provide assurances between buyers and sellers.

Typical Representations and Warranties

Sellers commonly provide representations and warranties covering various aspects, including:

• title and ownership – assuring unencumbered ownership of the property or shares;
• legal compliance – confirming adherence to zoning laws, building codes and possession of necessary permits;
• financial matters – disclosing existing leases, tax liabilities and outstanding debts;
• litigation status – stating the absence of ongoing legal disputes affecting the property; and
• environmental conditions – addressing environmental issues, such as soil contamination or hazardous materials like asbestos.

These warranties are designed to share the risk of unknown circumstances between the parties.

Statutory Seller’s Warranties

While Austrian law does not impose a general duty of disclosure on sellers, withholding critical information can lead to liability for fraudulent intent. Sellers are typically liable for misrepresentation if false statements induce the buyer into the contract, resulting in loss.

Buyer’s Remedies for Misrepresentation

If a seller breaches representations or warranties, buyers in Austria typically have the following remedies:

• compensation – claiming damages for losses incurred due to the breach; and
• contract rescission – in cases of significant misrepresentation, seeking to annul the contract.

To enforce these remedies, buyers may negotiate security measures such as:

• holdbacks – retaining a portion of the purchase price;
• escrow accounts – placing funds in escrow until obligations are fulfilled;
• bank guarantees – securing guarantees to cover potential claims; and
• parent company comfort letters – obtaining assurances from the seller’s parent company.

Survival Period of Representations and Warranties

The statutory warranty period in Austria is generally three years. However, it is common for parties to contractually limit this period to between 12 and 18 months. Exceptions often apply for fraud, tax, environmental issues and title warranties, which may have extended survival periods.

Liability Caps

Liability caps are standard in Austrian real estate transactions, with typical ranges as follows:

• title and tax warranties – up to 100% of the purchase price; and
• other warranties – between 5% and 35% of the purchase price.

These caps are often accompanied by de minimis thresholds and basket provisions to prevent minor claims.

Use of Representation and Warranty Insurance

Representation and warranty insurance (R&W insurance) is gaining traction in Austria. The increasing competition among insurers has led to more favourable terms for policyholders, with fewer exclusions and the possibility of specific disclosures for an additional premium.

In summary, while statutory provisions offer a baseline, the specifics of representations, warranties, and associated liabilities in Vienna’s commercial real estate transactions are predominantly governed by contractual agreements tailored to the particulars of each deal.

Property Ownership Regulations

Foreign ownership restrictions

Non-EU/EEA citizens may need approval from regional authorities to acquire property in Austria. Each federal province has its own regulations governing such approvals.

EU/EEA citizens

Citizens from EU or EEA member states are generally treated equally to Austrian nationals and typically do not require special approval.

Land Registration System

Austria maintains a centralised and transparent Land Register (Grundbuch) that records all property titles and encumbrances. Ensuring accurate registration is crucial for establishing legal ownership.

Contractual Obligations and Due Diligence

Purchase agreements

Contracts must comply with the Austrian Civil Code provisions, clearly outlining the terms, conditions and obligations of both parties.

Due diligence

Conducting thorough due diligence is essential to verify legal title, assess existing encumbrances, and ensure compliance with zoning and building regulations.

Taxation Considerations

Real estate transfer tax

Property acquisitions are subject to a transfer tax, typically 3.5% of the purchase price.

Value added tax (VAT)

Real estate transactions are generally not subject to VAT. However, if the seller is an entrepreneur, they may opt to treat the sale as VAT taxable at a rate of 20%.

Ongoing property taxes

Owners must pay annual property taxes based on assessed property value.

Zoning and Building Regulations

Compliance with local zoning laws and building codes is mandatory. These regulations, governed by provincial Building Acts, dictate permissible property uses and development standards.

Lease and Tenancy Laws

If considering rental investments, understanding Austria’s tenant-friendly laws is crucial. Regulations cover rent control, tenant rights, and lease termination procedures.

Environmental and Heritage Considerations

Environmental regulations

Investors should assess potential environmental liabilities, such as contamination or hazardous materials, which could impact property value and usability.

Heritage protection

Properties with historical significance may be subject to preservation orders, restricting alterations and imposing maintenance obligations.

In Vienna, as in all of Austria, environmental liability for soil contamination follows the “polluter-pays” principle. If the polluter is unknown or unable to remediate, the property owner may be held responsible.

To reduce this risk, liability for known contamination is often allocated to the seller in real estate contracts, typically through representations and warranties. Thorough environmental due diligence – such as reviewing the contaminated and suspected sites registers – is therefore essential before purchasing property.

In summary, while the polluter is primarily liable, property owners can face responsibility, making due diligence and clear contractual terms crucial.

To determine a property’s permitted use in Austria, local zoning and land use plans must be reviewed, as they define whether a site is zoned for residential, commercial, industrial or mixed use. The Land Register (Grundbuch) reveals any restrictions or encumbrances. For detailed questions or updates on zoning changes, the Municipal Department for Urban Development and Planning (MA 21) can assist. Urban development contracts, introduced by the 2014 Vienna Building Code, allow stakeholders to support rezoning or major projects while sharing infrastructure costs. Legal advice and due diligence are recommended before purchase to ensure regulatory compliance.

In Vienna, expropriation is legally permitted but strictly regulated. It requires a public interest, such as infrastructure projects, and must be a last resort after attempts at voluntary purchase. If negotiations fail, formal proceedings begin, allowing the owner to be heard and to appeal. Approved expropriations grant owners market-value compensation, with courts available to resolve disputes. Owners are well protected by procedural rights and judicial review.

When buying and selling real estate in Vienna as part of an asset deal, a land transfer tax of 3.5% and a land registry entry fee of 1% of the purchase price usually apply. Notary and legal fees are added and are usually borne by the buyer, although the distribution of costs is generally negotiable. A share deal (purchase of shares in a company that owns property) can also incur land transfer tax if at least 95% of the shares are transferred to a buyer or a group of companies – in this case, a tax rate of up to 3.5% also applies. Capital gains tax on capital gains affects the seller. Real estate transfer tax can also be triggered in the case of partial ownership transfers, such as a change of ownership in a partnership of over 95%. Tax exemptions and relief are available for transfers within the family or for reorganisations within corporate groups.        

Austrian investors can generally acquire real estate in the United States without nationwide restrictions. However, the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018 expanded the authority of the Committee on Foreign Investment in the United States (CFIUS), allowing it to review real estate transactions even without foreign control, particularly if properties are near military sites, ports, airports or critical infrastructure. Such “Covered Real Estate Transactions” may trigger reporting requirements, even for leases or usage rights. CFIUS can block or unwind transactions that threaten national security. Exceptions exist for private residential properties outside sensitive areas and for investors from designated partner countries.

In Austria, commercial real estate acquisitions are typically financed with a mix of equity and debt, with traditional bank loans being the most common. Loan-to-value ratios usually range from 50% to 70%, depending on the property’s location and type, and the buyer’s creditworthiness. For larger projects, mezzanine capital, project financing, bonds, or club deals with multiple investors or banks are often used. Complex transactions, such as large portfolio or share deals, frequently involve structured financing, syndicated loans or private equity-like models, with international banks, insurers and institutional investors acting as lenders. In these cases, thorough due diligence of the property, holding and financing structures is essential. Financing structures ultimately depend on the transaction size, risk profile and buyer’s capital structure.

In Austria, commercial real estate investors financing acquisitions or projects typically provide multiple forms of security to lenders. The primary security is a mortgage registered in the land registry, granting enforcement rights in case of default. Additionally, claims such as rental income, insurance proceeds or deposit accounts are often assigned. In project developments, construction contracts, general contractor agreements and future purchase price claims may serve as collateral. For larger transactions like portfolio purchases or share deals, share pledges, account pledges and guarantees (eg, letters of comfort or corporate guarantees) are common. A detailed security agreement usually governs the comprehensive security package, tailored to the transaction, risk profile and lender requirements.

There are no specific restrictions on foreign lenders securing real estate in Austria. They can legally register a mortgage in the Austrian land registry, provided all formalities under Austrian property law are met, including notarisation and registration, both easily manageable for foreign creditors.

No foreign exchange or capital controls hinder loan repayments or enforcement of collateral. However, tax and civil law aspects such as withholding tax on interest and compliance with double taxation treaties must be considered. Cross-border transactions also require checks on money laundering compliance and, where applicable, translations or apostilles.

In summary, securing and servicing collateral for foreign lenders in Austria is legally permitted and widely practised.

In Austria, various fees and taxes apply when ordering and enforcing collateral over real estate, such as when ordering a mortgage.

Land Transfer Tax

In principle, no land transfer tax is due if the security is provided in the form of a mortgage, since this is not an acquisition of property. However, land transfer tax may apply when real estate is sold.

Registration Fee in the Land Registry

For the registration of the mortgage or a lien in the Austrian land registry, a registration fee of 1.1% of the loaned amount is due.

Notary Fees

Notarial certifications are not mandatory in Austria for the creation of mortgages, unless special agreements or documents are involved. However, if a notarial certification is carried out, the fees can amount to between 1% and 3% of the value of the secured loan, depending on the complexity of the transaction, with the exact rate varying depending on the scope and agreement.

Administrative Fees

Administrative fees may also be incurred for making the entries and checks in the land registry, but these are usually relatively low.

Costs of Enforcing the Security

If it comes to enforcing the security (eg, foreclosure), court fees and other costs may also be incurred, which vary depending on the case and the proceedings. Attorney fees for legal representation may also be incurred.

Summary

To summarise, the main costs when creating a security interest in real estate are the registration fee at the land registry and notary fees (if required), while no land transfer tax is payable when the security itself is created.

In Austria, when a company creates security over its property assets, it must ensure that this is done in line with the company’s interests, ie, the security must provide a legitimate business advantage. A company must not provide financial support that merely benefits a third party and endangers its own assets, which is regulated in Section 225 of the Austrian Commercial Code (UGB). In addition, the approval of the shareholders’ meeting may be required, especially for extraordinary or risky decisions. In the case of listed companies, additional transparency and reporting requirements must also be observed. It is therefore crucial that the company’s management ensures that the provision of collateral is in the company’s interest and that all legal requirements are met.

When a borrower defaults on a loan, lenders typically need to initiate a legal process to enforce their security, such as a mortgage. This often starts with a warning and a deadline before applying for foreclosure. The timeframe for enforcing security varies, but is typically between six months and two years, depending on the complexity of the case. The priority of a security interest is determined by the order of entry in the land registry, with earlier entries being given priority. Pandemic-related restrictions on foreclosures and repossessions have now been lifted, and lenders can resume enforcement in the usual manner. However, in the current market, many lenders tend to refrain from enforcing and often prefer negotiations or restructurings instead of foreclosures. There is an active market for the sale of non-performing loans, which is used by investors who buy problematic claims at a discount in order to collect the claims or realise the underlying collateral.

It is possible for existing secured debt to be subordinated to newly created debt by contractual agreement, usually by means of a subordination agreement. In such an agreement, the creditor of the existing debt declares that, in the event of the debtor’s liquidation or insolvency, the creditor’s claim will be satisfied only after the more recent, senior creditors. This requires the consent of all parties involved and is often used in debt restructuring, recapitalisations or refinancings. Subordination can be accomplished through amendments to contracts or as part of a financing arrangement. There are no general legal restrictions as long as the terms are consistent with legal requirements, such as insolvency laws.

A creditor who holds a security over a property or enforces it in the event of an execution may, under certain circumstances, be held liable, even if not causing the pollution of the property. This may be the case if the property is contaminated with legacy pollution and the creditor manages or controls the property. In particular, a creditor can be held responsible for the removal of environmental hazards if they intervene in the exploitation process or are involved in the use of the property. In addition, a creditor could be considered a “responsible operator” if actively intervening in the management of the property and thus assuming liability for existing environmental pollution. In order to minimise liability risks, it is recommended that the property’s environmental conditions be checked as part of the due diligence.

If a borrower becomes insolvent, security interests created for the benefit of a creditor can be contested under certain conditions. In particular, if the security was granted within six months prior to the opening of insolvency proceedings and the creditor was or should have been aware of the impending insolvency, there is a possibility that the security may be declared void in the context of the insolvency proceedings. This serves to protect the equal treatment of creditors and to prevent individual creditors from receiving preferential treatment. If a security is challenged and declared invalid, the creditor loses the right to the security in question. However, as long as a security is not challenged, the creditor can continue to rely on it and will receive preferential treatment in the insolvency proceedings.

When ordering mortgage loans or mezzanine loans on real estate, no specific recording or transaction taxes are incurred in Austria, unless it is a transfer of ownership. However, a registration fee of approximately 1.1% of the secured amount is due for the registration of mortgages or other security rights in the land register, and is usually borne by the borrower. In addition, notary fees may be incurred for the notarisation of contracts and the preparation of documents. There are currently no specific new or proposed rules that provide for additional taxes or fees in connection with mortgage or mezzanine loans, apart from the usual land transfer tax and registration fees when a security is registered in the land registry.

Spatial planning and land use in Austria are governed by federal, state and municipal laws. The federal Spatial Planning Act sets general principles, while each state has its own detailed planning and building regulations. Municipalities implement these through zoning and development plans, which specify permitted land uses such as residential, commercial or industrial. These local plans are regularly updated.

Environmental, nature conservation and heritage protection laws also impact land use and construction. All projects must comply with these legal frameworks, and a building permit is typically required before development or use of a property.

The design, appearance and construction of new buildings or renovations in Austria are governed by strict building regulations, primarily set at the federal and state levels. In Vienna, the Vienna Building Code applies. A building permit is required to ensure compliance with rules on the following:

• urban aesthetics;
• heritage protection;
• fire safety;
• energy efficiency; and
• sustainability.

Regulations also cover:

• property use;
• required distances; and
• accessibility.

Listed buildings and historic districts are subject to especially strict aesthetic and preservation standards. Projects often require expert reports on structural safety or environmental impact, and must integrate with existing infrastructure.

Real estate development and use in Austria are mainly regulated by local and state authorities. Key legal frameworks include state building codes, spatial planning laws, and federal regulations such as the Environmental Protection Act, Nature Conservation Act and Monument Protection Act. These laws govern land use, especially in protected or historic areas. Common restrictions include:

• building obligations;
• height limits;
• land value benchmarks; and
• environmental standards.

New projects may also need to meet sustainability and energy efficiency requirements.

In Austria, obtaining building rights for new developments or major renovations requires submitting an application with detailed plans and reports to the relevant authority. The project is reviewed for compliance with building and zoning laws. Third parties, including residents and the municipality, may raise objections during a public procedure. These are addressed by the authority or in hearings. If all legal requirements are met and no significant objections remain, the building permit is granted.

In Austria there is a right of appeal against decisions of the competent authority in connection with the approval of construction projects or the pursuit of a particular use. If an application for building permission or for a change of use is rejected, the applicant can appeal to the higher administrative authority, usually the provincial government or a specialised appeal authority. In addition, judicial review is possible before the administrative courts if the applicant considers the decision to be unlawful. Third parties, such as neighbours, may also, under certain conditions, lodge an appeal if they are directly affected by the decision.

In Austria, development projects often require agreements with local or state authorities and utility providers, in addition to official permits. These may cover building rights, infrastructure use and municipal development contracts. Larger projects may need agreements on traffic, environmental measures or utility connections to ensure smooth implementation. In certain cases, transferring development rights may also be necessary if specific conditions apply to the development area.

In Austria, land use and development are regulated by building codes and public laws at federal, state and municipal levels. Municipal codes define permitted uses, building heights and setbacks, and determine whether a permit is needed. Authorities enforce these rules through inspections and can impose fines, usage bans or demolition for violations. Environmental and conservation laws may also apply. Non-compliance can lead to compulsory demolition and other penalties.

Investors can choose from various corporate structures to hold real estate, the most common being limited liability companies (GmbH) and joint stock companies (AG). A GmbH is often preferred, especially for larger real estate portfolios or commercial real estate, as it offers a flexible structure and limited liability. Another common structure is the Offene Gesellschaft (OG) or Kommanditgesellschaft (KG), especially when several investors work together, as these offer tax advantages and flexible participation models. Real estate funds or trusts are also used, especially by institutional investors or in larger transactions. In certain cases, such as the establishment of real estate projects, partnerships or limited liability partnerships (LLP) may also play a role, particularly if there is an international dimension. The choice of company often depends on tax aspects, liability issues and the planned structure of the investment.

In Austria, common legal forms for real estate investments include:

• stock corporations (AG);
• limited liability companies (GmbH);
• general partnerships (OG); and
• limited partnerships (KG).

AGs and GmbHs offer limited liability and flexible capital structures, requiring minimum capital of EUR70,000 and EUR35,000 respectively. In contrast, partners in OGs and general partners in KGs have unlimited personal liability.

AGs and GmbHs are subject to a 25% corporate tax, while OGs and KGs are tax-transparent, meaning profits are taxed at the partners’ personal income tax rates. Real estate companies benefit from depreciation allowances to reduce taxable income. AGs and GmbHs also enjoy more favourable capital gains tax treatment on dividends and share sales.

Start-up costs include incorporation, notary and ongoing accounting and administration, with partnerships generally incurring lower operational costs than corporations.

A real estate investment trust (REIT) allows investors to invest in real estate without direct ownership. Public REITs are traded on stock exchanges and open to a wide range of investors, including foreign ones, with no major restrictions. REITs offer tax benefits, particularly exemptions on income from rents and property sales, if at least 90% of income is distributed to shareholders. To qualify, a REIT must invest at least 75% of its assets in real estate, distribute 90% of income and comply with tax rules, including limits on ownership concentration.

The minimum capital requirements for setting up companies that invest in real estate vary depending on the type of company. A minimum capital of EUR70,000 is required for a joint-stock company (AG), of which at least 50% must be paid up at the time of incorporation. For a limited liability company (GmbH), the minimum capital is EUR35,000, of which at least EUR17,500 must be paid up at the time of formation. There are no fixed minimum capital requirements for a general partnership (OG) or a limited partnership (KG), but the partners must provide sufficient equity to ensure the liability and financing of the company.

Governance requirements for real estate companies in Austria depend on their legal form. GmbHs need a managing director, while AGs require a management and supervisory board. Both must hold annual meetings and submit financial statements to the commercial register. Partnerships such as OGs or KGs are tax-transparent, with profits taxed at the partner level. US investors face additional obligations under the Corporate Transparency Act, which requires disclosure of beneficial owners of foreign companies operating in the US, including those investing in Austria. This increases compliance duties, especially regarding ownership transparency.

The annual costs for corporate governance and accounting compliance for real estate investments depend on the type of company used.

• For a GmbH (Gesellschaft mit beschränkter Haftung) the annual accounting, tax advisory and compliance costs are typically between EUR3,000 and EUR7,000, depending on the complexity of the transactions and the number of books to be kept.
• For an AG (Aktiengesellschaft) the costs may be around EUR5,000 to EUR15,000 per year due to the higher administrative requirements and greater corporate governance.
• An Offshore (Offene Gesellschaft) or KG (Kommanditgesellschaft) tends to be cheaper to administer, with annual costs of around EUR2,000 to EUR5,000, although the complexity of the accounting and tax returns also plays a role here.

In addition, there may be costs for annual financial statements, tax returns and company meetings, which can vary depending on the size and structure of the company.

Austrian law allows temporary use of real estate without ownership through various rights. These include rental contracts for a fixed term and price, lease agreements that also transfer income, and loans granting free use for a set time. Housing and usufructuary rights permit use or occupation, often for life or limited periods. These legal forms enable property use without purchase.

There are different types of commercial leases in Austria, which vary depending on the type of use and the agreed conditions. The most common types are the lease for business premises, used for commercial or office space, and the leasehold agreement, in which the tenant is granted the right to use a property and to profit from the income (eg, gastronomy or agriculture). Furthermore, there is the leasing contract, which is used primarily for the rental of business equipment or machinery. In addition, a distinction is made between fixed-term and open-ended leases, with the rent in the case of long-term leases often being linked to an index (eg, the consumer price index). Another type is the combination contract, which integrates elements of rental and lease and is used in specialised business cases such as retail or hospitality.

In Austria, leases and rental conditions are generally freely negotiable. However, there are specific legal regulations for residential leases that are set out in the Tenancy Act (Mietrechtsgesetz – MRG). These primarily concern rents for apartments, which are regulated in certain cases by rent caps and rent regulations. For commercial leases, on the other hand, the rental conditions are largely freely negotiable, although there are some legal requirements that may affect, for example, the notice periods or lease term. In certain industries or regions, voluntary codes of conduct may also exist but, in general, commercial leases are more flexible and can be tailored to the needs of the parties.

Commercial lease agreements in Austria are primarily governed by the ABGB and the MRG. Lease terms typically range from five to ten years, with options for renewal or termination under agreed conditions. Open-ended leases are legally possible but less common in practice. Maintenance responsibilities are usually divided: tenants are responsible for the upkeep and repair of the interior areas they use, while landlords handle major structural elements like the roof or facade. These details are often specified in the lease contract. Rent is generally paid monthly in advance, though quarterly or annual payments can also be agreed. Payments are commonly made via bank transfer or direct debit.

Whether the rent amount remains the same for the entire duration of a rental contract depends on the contractual agreements. As a rule, rental contracts in Austria often involve indexation, especially in the case of commercial leases. This means that the rent may be linked to the CPI (consumer price index) and adjusted regularly to reflect inflation. There is also the option of renegotiating the rent after a certain period of time (eg, every five years) or agreeing a fixed rent for the entire duration of the contract. However, if no indexation clause or adjustment clause is specified in the lease, the rent will usually remain constant for the entire duration of the lease.

If the rent in Austria is to be changed or increased, the determination of the new rent is based on the rules agreed in the lease and the relevant legal provisions, such as the Tenancy Act (Mietrechtsgesetz – MRG). In the case of residential leases, a rent increase is generally only possible within the framework of value adjustment clauses or after a certain period of time, whereby the increase is usually linked to the price index (eg, the consumer price index). In the case of commercial leases, rent increases are more flexible but contractual agreements such as indexations, market adjustments or rent reviews may also play a role here. If no explicit provision is made, the rent adjustment can usually be reviewed by an arbitration board or a court of law if either party disagrees with the amount of the increase.

Rental income is generally subject to sales tax (value added tax, VAT), unless it is a tax-free rental. The general VAT rate for commercial leases is 20%. Exemption from VAT generally applies to residential leases, unless the landlord decides to waive the exemption and apply the tax liability (so-called “option to tax liability”). In this case, the standard tax rate of 20% would also apply to residential leases. Landlords can claim back VAT on expenses and investments related to the property if they opt for VAT.

In addition to the rental fee, there may be additional costs at the beginning of a tenancy, such as a security deposit, which as a rule may not exceed three months’ rent. In addition, contract fees may be incurred for the notarisation of the lease, depending on the agreement between the parties. In commercial leases, brokerage fees are often payable, which are usually borne by the tenant and can amount to up to three months’ rent. Operating costs such as heating, water and waste fees are also often to be borne by the tenant and can be determined at the beginning of the tenancy or apportioned to monthly advance payments. Additional administrative costs or renovation costs are also possible if this is agreed in the lease.

The costs for the maintenance and repair of communal areas such as parking lots and gardens (landscape maintenance) are usually divided between the landlords and tenants in accordance with the rental contracts and the house rules. In many cases, the landlord is responsible for the maintenance of these areas, but can pass on the costs to the tenants via the operating cost statement. This is usually done in proportion to the pro-rata area used or in accordance with the agreement in the lease. In the case of commercial leases, individual agreements can also be made, whereby larger rental areas or specific units of use often bear a higher share of the costs.

In the case of commercial real estate with multiple tenants, operating costs such as electricity, water, heating and telecommunications are usually paid directly by the individual tenants to the respective providers or they are billed centrally by the landlord and passed on proportionately in the operating costs statement. The allocation is usually based on a contractually agreed key, such as square metres or actual consumption, provided that separate metres are available. Telecommunications services (eg, internet or telephone connections) are often ordered and paid for individually by tenants. The exact regulation is set out in the respective lease and depends on the technical equipment and use of the building.

In the case of commercial leases, the tenant (lessee) is generally responsible for paying the operating costs, including the pro-rata property tax, provided that this is expressly stipulated in the lease – which is common in commercial leases. In the absence of a contractual agreement to the contrary, the landlord (lessor) generally bears the property tax and other property-related charges. It is therefore common practice in the drafting of contracts to pass on all apportionable costs such as public charges, insurance, maintenance and property tax to the tenant as part of the operating costs. In the case of residential leases, however, stricter restrictions under tenancy law apply with regard to the passing on of such costs.

The costs for insuring the rented property are usually borne by the landlord, although these costs are usually passed on to the tenant in full or in part as part of the operating costs. As a rule, building insurance covers damage caused by fire, water pipes, storms, hail, natural disasters and, in some cases, vandalism. During the COVID-19 pandemic, tenants in Austria were only able to successfully claim under business interruption insurance policies in exceptional cases, as many of these policies explicitly excluded pandemics or officially ordered business closures from insurance coverage or were unclear in their wording. As a result, many tenants continued to pay rent even when they were temporarily unable to use their business premises, which led to numerous legal disputes.

Landlords can contractually specify how a tenant may use the property, for example by means of dedications in the lease that prescribe a specific use (eg, as office, shop or warehouse) and exclude other types of use. In addition, public law provisions such as the building and regional planning law, which regulates the permissible use according to dedication in the zoning and development plan, apply. Use may also be restricted by commercial law provisions, fire safety requirements and heritage protection regulations. Both contractual and statutory provisions must therefore be observed when using rented properties, with particular attention being paid to official approvals and operating licences in the case of commercial use.

A tenant may only make structural changes or improvements to the property with the approval of the landlord. This approval can be contractually regulated in the lease and is particularly necessary for structural or substantial interventions. The landlord can impose conditions, such as the following:

• the work must be carried out professionally and at the tenant’s own expense;
• there should be no impairment of the building fabric or other tenants; and
• reconstruction to be carried out at the end of the lease if requested.

In many cases, landlords also require a building notification or permit and proof of liability insurance during the construction work. Making changes without consent can constitute grounds for termination or lead to claims for damages.

Different legal rules apply to various real estate types in Austria, such as residential, office, retail, industrial and hotel properties. Residential leases are often governed by the Austrian Rent Control Act (MRG), which offers strong tenant protections, including rent caps and termination restrictions. In contrast, commercial leases – covering offices, retail and industrial spaces – are typically less regulated or exempt from the MRG, allowing greater contractual freedom.

Hotels may fall under commercial or specific accommodation laws, depending on their use. During the COVID-19 pandemic, temporary legal measures granted rent reductions during mandatory closures, especially in retail and hospitality. Although these measures have largely ended, they have increased the focus on including crisis clauses in lease agreements.

Under Austrian insolvency law, a tenant’s insolvency does not automatically terminate the lease. The insolvency administrator may choose to continue or terminate the lease, observing statutory notice periods. From the opening of insolvency proceedings, the landlord can only pursue claims within the insolvency process.

Unpaid rent from before the proceedings counts as an insolvency claim and must be filed accordingly. Rent due after proceedings begin is considered a priority claim. The landlord cannot terminate the lease solely due to pre-insolvency rent arrears. Any termination is subject to protective rules favouring the administrator, especially if continuing the lease benefits the insolvency estate.

A tenant has no automatic right to remain in a commercial property after the lease ends, unless the contract includes renewal options or legal provisions apply. Under the Tenancy Act (MRG), which may partially apply to commercial leases, tenants are protected from termination except under specific conditions. However, if the lease is for a fixed term, it ends automatically, and the tenant must vacate. If the tenant stays and the landlord does not object, an implied lease may arise. To avoid this, the landlord should notify the tenant in writing and take legal action if needed. Clear return terms and proactive communication are essential.

A tenant may only assign their rights of possession to third parties or sublet the property (in whole or in part) with the consent of the landlord, unless otherwise stipulated in the lease. In many commercial leases, assignment or subletting is expressly subject to the prior written consent of the landlord, although the landlord may not arbitrarily withhold consent if there are no legitimate interests against it. Typical conditions include:

• the economic and legal standing of the new tenant;
• the contractual conformity of the use; and, often,
• an obligation for the main tenant to continue to be liable (eg, by way of surety or joint and several liability).

Without consent, a transfer of the lease is generally invalid and may even be grounds for termination.        

Typical events that give the landlord and the tenant in Austria the right to terminate the lease include, among other things:

• delinquent payments (eg, if rent is repeatedly unpaid); and
• breaches of contract, such as:
1. unauthorised use of the rented premises;
2. unauthorised subletting; or
3. serious violations of the house rules.

In addition, the tenant can terminate the tenancy for good cause – for example:

• in the event of unacceptable living or working conditions; or
• significant defects in the rented property that are not remedied within a reasonable period.

The statutory right of termination in the case of fixed-term tenancies or after the agreed rental period has expired is also common. In addition, the Tenancy Act (Mietrechtsgesetz – MRG) allows tenants to terminate a lease without stating reasons under certain circumstances, while landlords can generally issue a timely notice of termination with legally recognised reasons such as personal use or conversion of the premises. The exact conditions and deadlines depend on the type of lease and the individual agreements.

A lease agreement does not generally need to be submitted for registration in the land registry unless it is a fixed-term lease of more than three years or a lease with an acquisition right (eg, a purchase option). Such leases can be registered in the land registry upon request, but in practice this rarely occurs unless there are special agreements or legal requirements. When a lease or memorandum of lease is recorded in the land registry, a registration fee of approximately 1.1% of the lease value applies, which can be paid by the tenant or landlord, depending on the contractual agreement. This fee is charged if the lease exceeds a certain term or if it includes specific rights (eg, purchase options).

In Austria, a lease agreement can be terminated and the tenant evicted before the lease ends in cases of late payment or contract breaches. The process begins with a written warning and a payment deadline. If the tenant fails to pay, the landlord may issue a notice of termination. Eviction proceedings, including court involvement, typically take three to six months, depending on the court’s workload.

A lease cannot be easily terminated by a third party, such as the government or a municipal authority. However, certain legal provisions do allow for expropriation or the forced termination of leases under special circumstances – for example, in the case of urban development projects or public infrastructure projects. In such cases, the authority can terminate the lease, although the process can take several months depending on the complexity. Compensation for the tenant is usually provided for in the form of compensation payments that the public authority or the responsible authority must make. The amount of compensation is based on the tenant’s losses and the remaining rental value of the contract.

When a tenant violates the lease and terminates a lease agreement, the landlord is generally entitled to damages for the losses resulting from the violation, but there are legal restrictions. The damages may not exceed the actual loss incurred by the landlord as a result of the breach of contract. In addition, the landlord can claim outstanding rent, but lump-sum penalties or excessive compensation are usually not allowed. In addition to back rent and the tenant’s eviction, the landlord may also claim expenses for re-letting or renovating if these become necessary due to the breach of contract. Usually, landlords hold security deposits as a security deposit, which is usually deposited in cash, but bank guarantees or sureties in the form of letters of credit are also common practice. The security deposit serves as security against rent losses or damage and, according to the German Tenancy Act, must be deposited within a certain range (usually a maximum of three months’ rent).

The most common pricing model structures for construction projects are fixed-price contracts and cost-plus contracts. In a fixed-price contract, the total price for the construction project is agreed in advance, with the client bearing the risk of cost overruns. This type of contract is particularly common for clearly defined projects with well-delineated services. In a cost-plus contract, on the other hand, the client covers the actual costs of the project (eg, materials, labour) and pays the construction company a fixed margin or a fixed surcharge on top of that. This model is often used for less predictable projects where the exact costs are difficult to calculate. Both models offer advantages and disadvantages, depending on the type of project and the risk appetite of the parties involved.

In Austria, project responsibilities can be assigned through several models. The traditional model separates design and construction, with the client hiring an architect and a contractor independently. In the principal model, one company handles the entire process. General contractor agreements involve a single company managing the project, often delegating tasks to subcontractors. For complex projects, the Design & Build model combines design and construction under a general contractor, streamlining co-ordination and reducing client risk. Responsibilities are typically well-defined, with the client holding overall accountability and each party liable for its specific role.

Various instruments are used for risk management in construction projects, including:

• indemnifications (exemptions);
• guarantee declarations;
• liability restrictions; and
• waivers of certain claims for damages.

These serve to regulate risks in relation to the following:

• construction errors;
• delays;
• unforeseen costs; and
• liability exclusions.

Indemnifications relieve a party of liability for certain damages, while guarantees ensure the quality of the work or materials performed. Limitations of liability restrict liability for certain damages or set caps on damages. Waivers may exclude certain types of damages (such as consequential or indirect damages). However, these instruments are legally limited: disclaimers or limitations of liability for personal injury or intentionally inflicted harm are generally not allowed.

Contractual provisions and detailed project planning are typically used to manage the deadline risk on construction projects. The parties can contractually stipulate that the owner is entitled to monetary compensation if certain milestones or completion dates are not met. These provisions are often found in construction contracts or general contractor agreements, whereby a contractual penalty (also known as a delay penalty) is agreed to be paid if deadlines are not met. Exceptions for unforeseeable events such as force majeure can also be taken into account. The exact amount and conditions of such compensation are specified in the contract to minimise risk and provide clarity for all parties.

It is common for owners to require additional collateral security to guarantee the performance of contractors in construction projects. The instruments commonly used include guarantees (eg, bank guarantees or performance bonds), which provide financial security in case the contractor fails to meet its contractual obligations. Parent company guarantees, performance bonds and escrow accounts are also commonly used to minimise risk for the owner. Letters of credit may also be an option, particularly for international projects. These tools are used to ensure that work is carried out properly and that funds are available in the event of problems.

In Austria, contractors and designers have the right to establish a construction lien on the property in the event of delayed payment. This lien serves as security for unpaid services and is recorded in the land registry. To remove the lien, the owner must settle the outstanding claim or obtain a release of lien from the creditor. If the payment is not made, the creditor can enforce the lien, which in the worst case can lead to a foreclosure sale of the property.

Austrian law requires that certain requirements be met before a project can be used or occupied. One of the most important of these is the building permit, which must be granted before construction begins and ensures that the project meets the applicable building regulations and standards. Once construction is complete, a final inspection is usually carried out to ensure that the building corresponds to the approved plans and that the necessary safety and health standards have been met. If this is the case, an occupancy permit or usage approval is issued, which allows the owner to use the building for its intended purpose. Without this permit, the building cannot be used, even if it is already completed.

When buying or selling corporate real estate (eg commercially used properties) in Austria, the transaction is generally subject to value added tax (VAT). The standard tax rate is 20%, but it may be reduced to 10% or 0% under certain circumstances. In the case of the sale of real estate, VAT may be due on the sale price unless a tax-exempt intra-Community supply or a VAT option (ie, voluntary taxation of the sale) is exercised. As a rule, the seller collects the VAT and pays it to the tax office; the buyer can deduct it as input tax if entitled to do so (eg, in the case of a commercial purchase). However, there are exceptions to this, such as the sale of developed land, which may be exempt from VAT under certain conditions, or private sales, which are also not subject to VAT.

Various structuring strategies are often used to minimise the tax burden when transferring large real estate portfolios. One common method is the share deal, in which the shares in a real estate company (eg, a GmbH or AG) are sold instead of the direct transfer of real estate shares. This means that land transfer tax is only levied on the shares and not directly on the properties themselves, which in many cases results in a lower tax burden. Another strategy is to carry out real estate restructurings or mergers and acquisitions (M&A) in which existing companies with real estate assets are integrated to minimise tax liabilities. The use of holding structures and the avoidance of direct transfers of title to properties can also help to reduce stamp duty and registration fees.

The use of business premises is subject to local business tax, which is levied on the total remuneration of employees in the business and must be paid by the employer. This tax is a wage tax and is not applied directly to the use of the business premises themselves. Additionally, depending on the municipality, a traffic area levy or property tax may be due for commercially used real estate. There is no specific trade tax (such as the British business rates), but a property tax is payable on the value of the land and the buildings on it. Exemptions from the municipal tax usually exist for non-profit organisations or public institutions that do not make a profit.

Foreign investors are subject to income tax (for individuals) or corporation tax (for legal entities) at a rate of 25% for corporations and up to 55% for individuals, depending on the income, for rental income from real estate. If the investor has no permanent establishment, the tax is withheld at source – ie, the landlord must pay the tax on the rental income. However, there are exceptions and reliefs – eg, through double taxation agreements (DTAs), which allow for a reduction or exemption from tax. Disposals of real estate are subject to income tax or corporate income tax on the profit (ie, the difference between the purchase and sale price) and may also be subject to speculation tax of up to 30% under certain conditions if the property is sold within ten years. Private individuals may be exempt from speculation tax if the property is used by the owner or if a construction project is realised within certain time limits.

There are tax advantages for property owners, particularly in the area of depreciation and operating expenses. Real estate can be depreciated over a period of 40 years with an annual straight-line depreciation of 2.5% of the acquisition value, which reduces taxable income and thus the tax burden. For renovated or converted properties, the depreciation period may also be shorter. Furthermore, operating expenses such as maintenance costs, interest on loans or management costs can be deducted for tax purposes if the property is rented out. These tax advantages can be particularly important for real estate companies or investors that use real estate for rental or lease purposes. However, there are also restrictions and rules regarding the use of depreciation – eg, in the case of sales proceeds from a property.