Austrian VwGH: Tax Exemption Limit Is at 1,000 m2

Apr 11, 2025 Benn-Ibler Rechtsanwälte

The tax exemption for the sale of a house including the plot of land according to Section 30 (2) of the 1988 Austrian Income Tax Act (Einkommensteuergesetz, hereinafter EStG) only applies to plot sizes ‘as would normally be required for a building site’. The Austrian Administrative Court (Verwaltungsgerichtshof, hereinafter VwGH) has ruled that such a plot size shall be limited to 1,000 m², irrespective of the actual size of the property that is to be sold.

In the case at hand, the appellant had sold a property with a plot size of 3,637 m². He considered the entire plot to be tax exempt. However, the tax office and the Austrian Federal Finance Court (Bundesfinanzgericht, BFG) only accepted 1,000 m² for the exemption. The reason for this was that they believed that this was the size of a typical building plot according to current market opinion. The appellant argued that the special circumstances of his property should be taken into account and that larger plot sizes should remain tax-free.

The VwGH dismissed the appeal and confirmed that a standardised approach must be applied to ensure equal taxation. The decisive factor is not the specific nature of the property, but an average value, which in tax practice has been set at 1,000 m². This limit is also justified by the fact that land is limited and that building plots are becoming smaller and smaller as a result of increasing densification. In addition, it follows from the comments on the new regulation of property taxation by the 2012 Stability Act (1. StabG 2012) and on the master version of Section 30 of the 1988 EStG that a property size limit is necessary in order to maintain the ability-to-pay principle in income tax law and to ensure equal taxation.

The VwGH therefore ruled that only a maximum plot size of 1,000 m² shall be recognised for tax exemption on the sale of a house. The appellant’s extraordinary appeal was dismissed for lack of a substantial legal issue. The VwGH could not establish a violation of the appellant’s rights, and the written appeal did not describe a potential violation in a plausible manner.

VwGH Ro 2022/15/0020 (24 April 2024)