Establishment and sale of a building lease - which types of income are relevant for the property owner?

Dec 1, 2020 Benn-Ibler Rechtsanwälte

On the basis of a building lease contract concluded between the plaintiff and his contractual partner, a limited building lease was granted against payment. As a result, the plaintiff calculated the real estate income tax (Immobilienertragsteuer, ImmoEST) himself and paid it to the tax office, since he assigned his income from it to the income according to Sec. 30 of the Income Tax Act (Einkommensteuergesetz, EStG). On the basis of an external audit, however, the tax office came to the conclusion that the income obtained from the building lease must be qualified as income from renting and leasing (Sec. 28 EStG) and must therefore be subject to the standard rate of Sec. 33 EStG and not, as claimed by the complainant, the preferential ImmoEST rate. The Federal Fiscal Court (Bundesfinanzgericht, BFG) followed the opinion of the tax office.

The legal situation for building law is based on the Austrian Building Law Act (Baurechtsgesetz, BauRG) and according to Sec. 6 (1) BauRG is considered immovable property and is a real, alienable and hereditary right. The type of income to be taken into account for the present income is determined by Sec. 21 - 29 EStG, whereby it should be noted that the principle of subsidiarity always applies to income from private property sales (Sec. 30 EStG). Income from the letting and leasing of immovable property and rights subject to the provisions of civil law on real estate is income from letting and leasing in accordance with Sec. 28 (1) (1) EStG. Rights equivalent to real property are rights that exist, can be acquired and transferred separately from real property, including building law.

In summary, the allocation of this income according to Sec. 28 EStG exists for the creation of a building lease against payment (the initial establishment) with the property owner, whereas the sale of a building lease is covered by Sec. 30 EStG.

BFG GZ. RV/3100332/2020 (11.09.2020)