VwGH: Basis of assessment for land transfer tax

Aug 25, 2021 Benn-Ibler Rechtsanwälte

In the case at hand, the Supreme Administrative Court (Verwaltungsgerichtshof, VwGH) dealt with the question of whether the debt estate of a bank is to be added to the assessment basis of the land transfer tax.

The plaintiff sold a property with liens in favor of a bank. He wanted to use the purchase price to partially pay off the liens, which were significantly higher than the purchase price, and the bank undertook in return to release him from the encumbrances and discharge him from residual debt.

According to the tax office, the purchase price was far below the fair market value. It calculated the land transfer tax on the basis of a higher fair market value. In the appeal proceedings it was consequently stated that the bank's claims would have been irrecoverable, which is why they were prepared to grant residual debt relief so that the property could be sold. The Federal Fiscal Court (Bundesfinanzgericht, BFG) assumed that this debt relief was to be valued at the full nominal value of the debts and had to be added to the consideration.

In this regard, the VwGH states that according to Sec. 5 of the Real Estate Transfer Tax Act (Grunderwerbssteuergesetz, GrEstG), it is primarily the payment in return that is the basis of assessment for the real estate transfer tax. Therefore, the person providing this payment, i.e. the purchaser, is to be taken into account.

However, Sec. 5 (3) (2) GrEstG also mentions services rendered to the transferor by a third party. This person could therefore also be taken into account. The payment of the discharge of residual debt in question had been made by the bank; from its point of view, this was a claim which it waived.

According to the VwGH, Sec. 14 of the Valuation Act (Bewertungsgesetz, BewG), which is relevant here, regulates that (among other things) debts are to be valued at their nominal value. In this case, however, the perspective of the bank was to be taken into account. The payment is therefore not a debt, but a claim, and Sec. 14 (2) BewG does not take into account irrecoverable claims, according to the Supreme Court.

Thus, the bank's claims were not to be added to the payment in return. The VwGH overturned the decision of the BFG on the grounds of substantive unlawfulness.

VwGH Ro 2020/16/0024