OGH: Valuation of Gifts in Austrian Inheritance Law

Jun 2, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, OGH) has clarified: In the valuation of a gift pursuant to Section 788 of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB), any investments in the gifted asset previously made by the subsequent recipient shall be disregarded.

In the original case, the plaintiff was the illegitimate child of the deceased and had simply been placed in the compulsory portion in the will. The defendants are the deceased’s legitimate children, who are his heirs in different shares. The deceased gave a piece of property to the second defendant and her husband. Prior to the gift, they had made extensive investments in the property as, according to the deceased, they would ‘get the property anyway.’ At the time of the gift, the value of the property was approximately EUR 88,000 taking into account the investments, and approximately EUR 32,500 not taking into account the investments.

The plaintiff now claimed his compulsory portion including the value created by the investments made.

Before the OGH it was finally disputed whether the investments made by the second defendant were to be taken into account in the valuation of the property.

According to Section 788 ABGB, an item gifted shall be valued at the actual time when the gift was made. This value shall be adjusted at the time of death in accordance with the current consumer price index.

Since, according to the wording of the law, it is only the date of the gift that matters (i.e., the cut-off date), any increase in value (including investments made before the gifting) may not be deducted. However, strictly applying the cut-off date principle would lead to the unfair result that any investments made by a (future) recipient prior to the gifting would have to be taken into account in the valuation of the asset.

According to the OGH, however, a calculation of the value of the gift including the add-back is not acceptable because the investments made by the recipient of the gift do not constitute a free gift from the assets of the deceased.

Therefore, any such investments do not have to be taken into account in calculating a gifted asset’s value.

OGH 2 Ob 9/23x (20.04.2023)