A Trust Agreement by Itself Is Not Circumvention

Jul 25, 2025 Benn-Ibler Rechtsanwälte

A sale of real estate to a company not governed by the Tyrolean Real Estate Transfer Act (Tiroler Grundverkehrsgesetz, hereinafter TirGVG) as a foreign entity is not deemed circumvention solely because the purchaser may provide a third-country national with ownership-like rights through a trust agreement.

Trust agreement: Seller demands purchase price and ancillary costs

On June 1, 2022, the plaintiff, acting as seller, entered into a purchase agreement with the first defendant who qualifies as a resident under the TirGVG for a property located in Tyrol that is not designated for agricultural or forestry use. At the time the contract was executed, approval from the land transfer authority had not yet been obtained.

The seller of the defendant company and its general partner subsequently requested payment of the purchase price, as well as reimbursement for the real estate transfer tax and court registration fees that the plaintiff incurred as a result of the first defendant’s fault.

Straw buyer transaction’ for Ukrainian citizen

The defendant asserted that the property acquisition constituted a straw buyer transaction, characterizing it as a form of circumvention. The defendant further contended that transactions of this nature are considered invalid unless approved by the relevant land transfer authorities.

The lower courts dismissed this argument and affirmed the validity of the claim.

No circumvention transaction without disclosure of the trust arrangement

The Austrian Supreme Court (Oberster Gerichtshof, OGH) dismissed the appeal for the reasons detailed below:

Recent case law establishes that a circumvention transaction is present when a legal arrangement objectively achieves the distribution of the purpose underlying a circumvented norm, irrespective of the parties’ subjective intent regarding circumvention.

In the case at hand, there is no evidence to suggest that the plaintiff sought to transfer economic ownership to a third-country national, nor are there any indications of a trust agreement scheme. The purchase agreement explicitly vested property ownership in the defendant company and, as such, did not contravene the underlying intent of the real estate transfer approval requirement.

The existence of a trust agreement between the Ukrainian citizen and the buyer does not constitute the transaction as an act of circumvention. Additionally, dividing the transaction into two parts is not considered impermissible, since different individuals were involved in each.

OGH 1 Ob 62/25m (27 May 2025)