Erich Resch, partner at TPA Steuerberatung, gave a lecture at the ImmoDienstag in Vienna on the topic of “Share Deal vs. Asset Deal from a Tax Standpoint” and gave a brief interview on the topic. How to make tax savings when buying real estate.
Tax tips for property purchases
The reasons for choosing a share deal or an asset deal in individual cases when purchasing real estate are explained from a legal and tax standpoint. The possibilities for structuring selling and acquiring companies, as well as the process involved in a typical share deal and asset deal when purchasing real estate, are described, from the due diligence check through to completion.
Special attention is given to the frequently important topic of deal financing and any associated pitfalls (repayment of contributions, financing by the target company, etc.).
What taxes and fees may be involved in the purchase of real estate?
When real estate is transferred, numerous types of taxes and fees come into play, such as income taxes, VAT, property transfer tax, legal transaction fees and court fees.
What advantages does a share deal offer?
The share deal, i.e. the sale of shares in property-owning companies, frequently offers advantages with regard to the “transaction taxes”, i.e. property transfer tax, fees and VAT. However, from an income tax perspective, a distinction must be made for the share deal between transparent partnerships (general partnerships (OG) and limited partnerships (KG) and non-transparent corporations (limited liability companies (GmbH) and joint stock corporations (AG)).
What is the difference between a share deal and an asset deal?
The sale of partnerships works like an asset deal in terms of income tax. The seller must pay tax on the hidden reserves and the buyer has the full acquisition cost as a “depreciation base”.
On the other hand, the limited liability company share deal involves predecessor accounting. The buyer consequently purchases a “tax deferral” in the amount of the difference between the fair market value and the book value of the real estate at the level of the limited liability company (“hidden reserve”).
What tax benefits are there for those involved?
On the seller’s side, the sale of shares in a property-owning limited liability company can be advantageous in individual cases. However, in the worst-case scenario the seller of a limited liability company must pay tax on hidden reserves at its level, yet the buyer purchases a tax deferral at the level of the target limited liability company.
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