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What does secondary residence, alien land acquisition law mean, recreational residence?

If foreigners in Austria wish to acquire ownership, co-ownership, building rights or easements for properties, official approval is required. But: Who actually counts as "foreigner"? And what does it mean to fall into this alien land acquisition law? In cooperation with the lawyers of Hasch & Partner Rechtsanwälte, we are pleased to provide you with a comprehensive overview of this topic.

Beitrag verfasst mit Unterstützung von:
HASCH & Partner Rechtsanwälte

The alien land acquisition law (Ausländergrunderwerbsgesetz) stipulates that the purchase of real estate, primarily from residents and nationals of EU and EEA member states (which are treated equally to nationals in this regard), should be permitted without authorization. However, members of so-called third countries must undergo a licensing procedure that is based on the country-specific alien land acquisition laws of the individual federal states, eg in the Vienna Alien Land Purchase Act (W-AGWG), Oö Grundverkehrsgesetz 1994 (Oö GVG 1994) or NÖ Grundverkehrsgesetz 2007 (NÖ GVG 2007 ).

In the following, you will find an overview of the general procedure for the land acquisition of foreigners, especially in the federal states of Vienna, Lower Austria and Upper Austria.

Who is actually a "foreigner"?

Essentially one counts – in the sense of the basic traffic laws – the following entities to the group of the "foreigners":

  • Natural persons who are not citizens (residence and habitual residence are irrelevant)
  • Companies with foreign domicile, thus legal entities and registered partnerships whose registered office / head office / head office is located abroad. (Even if the assets of a foreign-domiciled company are located in Austria, the company qualifies as a "foreigner");
  • Austrian companies with foreign assets, therefore legal persons and registered partnerships domiciled in Germany, which have a connection to foreign countries; For example, their share capital or shares in the assets are predominantly foreign-owned (Lower Austria) or in which exclusively or predominantly foreigners are involved (W, Upper Austria). For this question, differentiate between:
    • rigorous examination in Carinthia, Lower Austria, Salzburg and Tyrol, according to which it is up to the ultimate level ("Ultimate Shareholder") to check whether the assets are of foreign origin, and one
    • simplified examination in Vienna, Upper Austria, Burgenland, Styria and Vorarlberg, after which the shareholder of the acquiring company is seconded; if the direct shareholder is domiciled in Germany, the company can not be qualified as a "foreigner". The purpose of this double-decker structure should not be merely a circumvention of the provisions of the basic legislation;
  • Companies with foreign administration, therefore with a majority (in Upper Austria at least half) foreign management;
  • Foundations and funds, if the income at least predominantly (in Upper Austria at least half) benefits foreigners or, if the administration is exclusively or predominantly foreign persons (Lower Austria) or at least half of the executive bodies are foreigners (Upper Austria).
  • Associations whose majority are foreigners (W, Lower Austria, Upper Austria) or whose governing body consists of a majority of foreigners (W, Upper Austria).

When does equality of foreigners with nationals occur?

All nine basic traffic laws provide for equality between EU members and EEA members (natural and legal persons). However, it is crucial that the acquisition process takes place in the exercise of one of the European fundamental freedoms. These include free movement of workers, freedom of establishment, freedom to provide services, residence and exercise of the free movement of capital. For natural persons, it is advisable to note this separately in the contract. In the case of legal persons, it depends on the registered office, the head office or the main branch. Origin of the share capital is not relevant (Art. 54 TFEU). Nationals of third countries are in principle subject to the authorization procedure. However, if there are bilateral (economic) agreements with the respective third country, their relatives can also be exempted from an examination.

Which legal transactions require authorization?

Whether a legal transaction is subject to an audit is always to be reviewed on a case-by-case basis. In particular, the following transactions are subject to approval by foreigners:

  1. Direct acquisition of property (main application) by purchase contracts for the acquisition of ownership of real estate, building rights, super-certificates (not in W, Upper Austria), personal easements and
  2. Indirect acquisitions by means of a share deal - this does not cover the acquisition of shares in foundations or funds. In Lower Austria, the audit has to be restrictive, as share deals are not explicitly included in the law. Public limited companies are not included in OÖ, but the acquisition of company shares in a GmbH, legal partnerships of company law, other legal partnerships (OG, KG, GmbH & Co KG), or of cooperative shares. In W Share Deals are not subject to any audit.
  3. Acquisition of other rights, in particular (in W, Upper Austria: property to be incorporated in the land register) (rent, lease) and other rights of use and leases (precarious, dismantling contract) to real estate, right to fruit, right of use, easement of the dwelling. Liens are generally not subject to approval (exception in Upper Austria).

What are the conditions for obtaining a permit (procedure)?

In principle, the applicant must justify either a social, economic, cultural or national political interest.

Depending on the state, one or more conditions may be eliminated. A social interest exists in particular if the object of acquisition is intended to satisfy the personal living needs of the applicant – which means: creating a home for himself.

An economic interest is given, amongst other things, if the acquisition of the settlement serves an expansion of a business or the conservation of an existing operation.

In Vienna, the applicant must justify whether there is an economic or social interest.

In Lower Austria, the permit may only be issued if state political interests are not impaired, if the acquisition of the right entails a (economic) social or cultural interest, or if the acquirer has had his main residence in Austria for at least ten years.

In Upper Austria, cultural or sociopolitical interests as well as public order, security and state political interests must not be impaired.

Who is responsible?

For immigration matters concerning foreign persons the immigration authority MA 35 is responsible in Vienna, in Lower Austria the Lower Austrian provincial government, Department of Agrarian Law, and in Upper Austria the District Transit Commission or its chairman.

Which documents are needed? Where can I see the legal costs?

In particular, you will need:

  • a request for authorization (application form or informal application depending on the authority)
  • Legal title / contract in copy
  • current land registry extract
  • a map of the region
  • a passport copy
  • the announcement of the intended purpose of the acquired object

When acquiring as a legal entity, a current excerpt from the company register, the articles of incorporation and the business license are required. In the case of acquisition by an association, an excerpt from the register of associations and association statutes, a proof of the nationality of the members of the management body of the association and, on a case-by-case basis, proof of income must also be provided. The concrete forms and costs for the approval procedure can be found on the respective websites of the competent authorities.

What are the costs for me?

Using the example of Vienna, the costs for a permit amount to as follows:

  • Administration fee per applicant person in the amount of EUR 76.30
  • or upon acquisition of a personal easement right (such as the right of use), an administrative fee per claimant of EUR 47,23
  • additionally an administrative fee of EUR 3.27 plus for the legal clause
  • a federal fee of EUR 14.30 and
  • Federal fees in the amount of EUR 14.30 for the application of each applicant and deposit number and
  • for each supplement in copy per sheet EUR 3.90 but maximum 21.80 euros

Conclusion: The costs amount to approx. EUR 80 to EUR 130.

What is building land? And what is a leisure residence?

Building plots are generally built-up and undeveloped plots of land, which are designated as building land within the meaning of the land-specific regional planning act in a zoning plan approved by the state government. With the exception of Carinthia, Lower Austria and Vienna, all Grundverkehrs- und Raumordnungsgesetze contain provisions concerning the acquisition of building land for the purpose of establishing a second home. For example, § 7 Oö GVG provides that legal purchases for recreational purposes on plots of land within a reserved area are inadmissible. By ordinance, certain reservation communities were defined by the state government.

The acquisition of recreational residences in the reserved area is only exceptionally possible in accordance with § 7Oö GVG:

  • on plots of land with dedication for second homes;
  • by close relatives (legal predecessor must have been the owner of the property or property for at least the last 10 years);
  • in the case of acquisitions whose property has been used exclusively for recreational purposes for the last 5 years.

If a property is used for this purpose – despite a ban on the establishment of a leisure residence – the acquirer may be partially instructed to use it correctly. In the worst case, it can come to the auction of the acquired property. In addition, the authority can impose administrative penalties.

In Upper Austria, legal acquisitions of building plots and other plots of land where the legal purchase is for residential purposes and to establish a recreational place of residence in a reserved area, in any case a permit (§ 8 Abs 2 Z 2 Öö GVG) is required.

If a foreigner wishes to acquire a leisure residence in the reserved area in Upper Austria, the legal acquisition must be approved only if the conditions for a required approval pursuant to § 7 Oö GVG (recreational residences in the reserved area) are met. This follows from § 8 Abs 4 Z 1 Oö GVG.

When does the application (authorization-free legal transactions) no longer apply?

For all legal transactions, which are not explicitly mentioned in the law, there is no requirement for approval. In particular, excluded are:

  • In Lower Austria:
    • joint acquisition of spouses / registered partners of which one is an Austrian citizen;
    • land purchase between spouses after at least ten years of marriage / registered partnership;
    • splitting up the marital property within two years after the end of the marriage or sharing the partnership assets and the partnership savings within two years after the dissolution or annulment of the registered partnership;
    • land acquisition according to §§ 13 or 15 of the Real Estate Sharing Act;
    • land purchase of relatives in straight line or siblings;
  • in Vienna:
    • joint acquisition of spouses / registered partners of which one is an Austrian citizen;
    • acquisition of objects on which residential property can be established by an owner partnership (§ 13 WEG 2002), one of which is an Austrian citizen;
    • if the granting of a movable property is only subject to a court of law (super-certificate);
    • legal transactions on the grounds of death (acquisition of property on the basis of a will or a certificate of responsibility);
    • legal transactions with foreign states / international organizations for the purposes of the representative authorities of these states / organizations.

What are the consequences of a refusal of approval?

A failed approval is considered retroactive ineffective.

What is a negative confirmation?

A negative confirmation (Negativbestätigung) is not as negative as it sounds, rather the opposite: the Fundamental Transport Authority confirms that the proposed transaction does not require approval. However, only certain people can apply for such confirmation, namely:

  • Beneficiaries through state treaty obligations
  • Employees of the following institutions: UNO, CDPTO, ICMPD, UNIDO, OSCE, Joined Vienna Institute, OFID - The OPEC Fund for International Development, WASSENAAR Arrangements, European Patent Organization and IAEA / IAEA
  • Swiss legal persons
  • Iranian citizens who are self-employed

For spouses, these special rules do not apply (except CDPTO).

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