Capital gains or income from realised value increases
Since 1 April 2012, income from capital assets has been extended in § 27 III and IV of the EStG to include so-called capital gains, i.e. increases in the value of the assets themselves.
Income from realised value increases of capital assets primarily includes income from the sale and redemption of capital investments whose current yields constitutes income from the transfer of capital. Put simply: If the yields from an investment are taxable, the gains from the sale of this investment are also taxable.
This affects in particular the sales of
- corporation shares
- GmbH shares
- debt securities (also upon redemption)
- investment fund and real estate fund units
Realised value increases of capital assets are subject to limited liability to pay taxes if and insofar as this income is derived from the sale of an share in a corporation with its registered office or place of management in Austria in which the taxpayer held an interest of at least 1 % within the last five calendar years. If there is no domestic depositary entity that pays capital gains tax in Austria, this income – if and insofar as it is taxable – must be assessed by the taxpayer. Moreover, an exemption or a refund claim may be due on the basis of a double-taxation agreement. For further information on refunds click here.
Determination of income upon disposal
The gain on disposal is the difference between the sale proceeds and the acquisition cost. Redemption of a security is treated in the same way as its sale is. It is to be noted that incidental acquisition costs (e.g. consultancy costs or transaction fees) and expenses related to the financial assets (e.g. custody fees) may not be deducted.
Exit taxation (§ 27 VI 1 EStG)
Any circumstances leading to loss of Austria’s right of taxation with regard to the gains on disposal likewise constitute disposal. This is the case in particular when the taxpayer moves abroad, because the double-taxation agreements generally grant the right of taxation to the country of residence. The notional sale proceeds are the fair market value at the time of departure. In the case of debt securities, accrued interest shall also be considered.
If the taxpayer does not notify the bank of the departure, the taxpayer must make a corresponding disclosure in the tax return.
In the tax return, a deferral of taxation until the actual sale (= non-imposition) can be requested if
- an individual moves to an EU/EEA state, or
- the asset is transferred gratuitously to another individual who is likewise a resident of an EU/EEA state.
For all other restrictions on the right of taxation in relation to EU/EEA states, a request can be made in the tax return to pay the tax liability in instalments. This concerns, for example, gratuitous transfers to foundations.
Furthermore, the taxpayer can prevent a (later) deduction of capital gains tax at the bank altogether by notifying the bank of the departure and submitting to it the decision in which the tax office rules on the tax liability incurred as a result of the departure. Accordingly, taxation takes place only in case of assessment upon disposal, new departure or subsequent transfer of the asset or derivative to a state that is not an EU/EEA state.
If, on the other hand, the taxpayer duly notifies the bank of the departure, there is, as a rule, an obligation to pay capital gains tax on the basis of the fair market value less the acquisition costs. For the purpose of determining the value, the bank may assume generally that the notification date is also the departure date. However, the actual capital gains tax deduction is made only when the taxpayer who has moved away actually sells the property (or withdraws it from the custody account).
Custody account withdrawal (§ 27 VI 2 EStG)
As a rule, realised value increases are taxed upon disposal. If securities are withdrawn from a custody account or transferred to another, for avoidance of tax evasion this is classified as fictitious disposal. The sale proceeds are deemed the fair market value at the time of the withdrawal or the transfer of the deposit. This can be avoided if taxation in the actual event of disposal is ensured. Taxation is ensured if only a transfer is made to another custody account of the same taxpayer at the same custodian entity (bank). In the other cases (transfer to the custody account of another person, transfer to the custody account at another bank, transfer as part of a reorganization), the taxpayer can avoid the capital gains tax deduction by providing the bank with information about the mere change of custody account (or about a merely gratuitous transfer, such as acquisition by inheritance or donation or about the transfer as part of a reorganization), thus ensuring the tax claim. The transfer from one foreign custody account to another foreign custody account is also covered by this (which is usually relevant only in the case of unlimited tax liability). In these cases, the securities account holder himself/herself must inform the tax office the transfer within one month.
Without corresponding information that ensures the taxation claim, the custodian entity (bank) must make a capital gains tax deduction.