Austria's Inheritance Tax Exemption: What You Need To Know

Inheritance tax is a tax levied on the transfer of assets from the deceased to their heirs. In Austria, inheritance tax was abolished in 2008. However, there are still some taxes and regulations that apply to the inheritance process. For example, heirs who inherit property from their relatives are subject to a property transfer tax, which has been increased since the tax reform in 2015/2016. Additionally, there are notification requirements for gifts, both during life and upon death, with penalties for failure to report. While Austria does not have inheritance tax, understanding the tax system and estate planning is crucial for individuals looking to create a will or plan their finances.

Austria's inheritance tax was abolished in 2008

When inheriting property from relatives, heirs are still subject to property transfer tax, which has undergone various changes over time. For properties valued at €250,000 or more, a real estate transfer tax of 0.5% is applied. If the property value exceeds this amount by €150,000, the rate increases to 2%. For values higher than this, a rate of 3.5% is charged.

In addition to property transfer tax, there are also notification requirements for some gifts, both during life and upon death. Donations from close relatives and life partners exceeding €50,000 must be reported to the tax authorities within five years. Failure to do so can result in fines of up to 10.00% of the gift amount.

The abolition of inheritance tax in Austria came about due to the massive unequal treatment of financial assets and real estate. While it may have seemed like a significant tax loss for the state at first, the disclosure of figures from 2007 revealed that only €110 million in inheritance tax was paid in the entire country, classifying it as a minor tax.

Heirs are assessed with property transfer tax

Austria has not had an inheritance tax since 2008. However, heirs who inherit property from their relatives are assessed with property transfer tax. This is why inheritance tax is still a topic of public discussion, despite not being in place.

The Austrian Constitutional Court abolished inheritance and gift taxes in 2008 due to the unequal treatment of financial assets and real estate. The government has no plans to reintroduce inheritance tax as a new wealth tax.

The property transfer tax was significantly increased as part of a tax reform in 2015/2016. The market value has been used as the assessment basis in Austria since January 2016. For the first €250,000, the tax rate is 0.50%. For the next €150,000, the rate is 2.00%, and for any amount over €400,000, a rate of 3.50% is charged.

In addition to property transfer tax, there is also a gift reporting tax. Gifts of cash, shares, etc. to relatives must be declared to the tax authorities if they exceed €50,000. For third parties, this amount is €15,000. Transfers of real estate are excluded from gift reporting tax as they are subject to property transfer tax.

There are no gift taxes in Austria

Austria has abolished inheritance tax, but there is still a property transfer tax, which has been increased as part of a 2015/2016 tax reform. This means that heirs who inherit property from their relatives are assessed with the property transfer tax.

The Austrian Constitutional Court abolished inheritance and gift taxes in 2008 due to the unequal treatment of financial assets and real estate. This was a minor tax, with only 110 million euros in inheritance tax paid across the whole of Austria in 2007.

There is also no wealth tax in Austria.

Real estate property transfer tax may apply to transfers of inherited Austrian real estate

Austria does not have an inheritance tax. However, there is a transfer tax on property, which is calculated based on the acquisition price. This means that if you inherit real estate in Austria, you may be subject to a property transfer tax.

The property transfer tax rates are as follows:

• The first €250,000 is taxed at 0.5%
• The next €150,000 is taxed at 2%
• Anything over €400,000 is taxed at 3.5%

These rates are significantly higher than they were before the 2015/2016 tax reform.

The property value is calculated based on the real estate price table or an independent expert opinion.

In addition, there is an obligation to declare gifts to the tax authorities. Gifts from close relatives and life partners over €50,000 and donations from other groups of people over €15,000 within 5 years must be reported. Failure to do so can result in fines of up to 10% of the gift amount.

There are notification requirements for some gifts

Austria has no inheritance tax, but there are some requirements for reporting gifts to the tax authorities. This is because the Austrian Constitutional Court abolished inheritance and gift taxes in 2008 due to the unequal treatment of financial assets and real estate.

Gifts of cash, shares, etc. must be declared to the tax authorities if they exceed €50,000 in the case of relatives, or €15,000 in the case of third parties. This is known as the gift reporting tax. It is important to note that transfers of real estate are excluded from gift reporting tax as these transactions are subject to property transfer tax at a general rate of 3.5%.

Donations from close relatives and life partners of €50,000 or more, and donations from other groups of people of €15,000 or more within a 5-year period, are still subject to notification. Failure to report these gifts to the tax office will result in fines of 10% of the gift amount.

There is no obligation to report gifts of artwork or occasional gifts up to a value of €1,000, including household items. Additionally, there is no obligation to notify a free purchase up to a limit of €15,000. However, this limit has a time span of 5 years and is calculated from the time of the last gift.

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