Frequently Asked Questions
A. Acquisition of land:
If I acquire a farm in Tyrol, am I required to cultivate it myself and live on the farm?
Following a decision of the European Court of Justice in Ospelt versus the Republic of Austria, a purchaser relying on the free movement of capital need neither live on the farm purchased nor cultivate it himself. However, there must be a guarantee that the farm will be properly cultivated.
A. Award at auction:
In enforcement proceedings in Austria, purchase of real estate at an auction is referred to as the “award”. What is remarkable is that the provision that the price paid for agricultural and forestry land must not exceed the market value by more than 30% apparently does not apply to an acquisition by auction. This means that much higher prices can be paid for agricultural and forestry land in auctions than are allowed in contractual transactions. This appears to be an unlawful distinction.
C. China:
Can Chinese companies acquire land in Austria?
The free movement of capital means that no one can be prevented from acquiring land in Austria and in particular in Tyrol by virtue of his nationality or the place of his company’s registered office.
C. Civil law effect of the restriction on transactions:
The provisions of the laws on the acquisition and sale of land in the federal provinces mean that transactions can become null and void if, despite the obligation to file them for approval, they are not filed within two years. In its decision in the case of Burtscher versus the Republic of Austria, the European Court of Justice held that this automatic nullity was an infringement of the free movement of capital and was not to be applied even to Austrians on the grounds of the non-discrimination of nationals.
C. Cultivation requirement:
In its decision in the case of Ospelt versus the Republic of Austria, the European Court of Justice held that proper cultivation as a precondition for acquisition of agricultural and forestry land is sufficient in Austria. Thus there is no need for the purchaser to cultivate the farm himself, since this would infringe the free movement of capital.
E. European Union:
Does the law of the European Union also apply in Austria and in particular in Tyrol?
In formal terms, the law of the European Union also applies in Austria and hence also in Tyrol. The provisions concerning the free movement of capital apply automatically, which means that they take priority over national law if the latter is in conflict with the free movement of capital. Nevertheless, the Tyrolean law on the acquisition and sale of land has still not been adjusted to European Union law. In particular, the free movement of capital is still subject to provisions in Tyrol that are in fact invalid due to the priority of European law.
E. Evasion transactions:
An evasion transaction is if the parties to the contract attempt to carry out a contract under a different name. Before the decision of the European Court of Justice in the case of Ospelt versus the Republic of Austria on the free movement of capital, evasion transactions were above all of relevance in the field of agricultural land transactions. This relevance has declined now that the free movement of capital prevents the requirement of purchaser cultivation and residency (living at the farm purchased).
F. Foreigners:
Are foreigners allowed to acquire land in Austria?
The free movement of capital means that foreigners can acquire land in Austria just like Austrian nationals. This also applies to non-EU foreigners. If a company wishes to acquire land, it can have its registered office anywhere in the world and not necessarily in the EU. This regulation is currently being ignored particularly in Tyrol, a manifest breach of EU law.
F. Free movement of capital:
What does free movement of capital mean in connection with the acquisition of real estate?
The free movement of capital in connection with the acquisition of real estate means that any person and any company can acquire land in Austria, in particular in Tyrol, irrespective of nationality (Austrians or foreigners or EU citizens) and irrespective of the registered office of the company, as held by the judicial practice of the European Court of Justice.
G. Germany:
Do German nationals benefit from equal treatment with Austrian nationals when acquiring land in Austria?
European Union law means that nationality or the place of a company’s registered office cannot be a relevant criterion and hence cannot be a ground for refusal in the field of the free movement of capital. In fact, however, there is discrimination in my view against German nationals wishing to acquire real estate, particularly in Tyrol, as compared with Austrian nationals. In particular, there is discrimination in the fact that the authorities proceed differently if EU foreigners, particularly German nationals, are suspected of an unlawful secondary residence than when this is the case with Austrians. One of my specializations is for instance to take steps against this discrimination and to file proceedings on behalf of clients against public authorities in connection with measures taken against allegedly prohibited use as secondary residence.
G. Grounds for refusal:
Probably the only remaining provision of importance as a ground for refusal in the field of the acquisition and sale of agricultural and forestry land is the regulation that the purchase price must not exceed market value by more than 30%. Thus agricultural and forestry land can only be sold at a price that is less than 30% above the market price.
H. Holiday homes:
Is a home that is not used all year automatically a prohibited holiday home?
The use of a home does not depend on how frequently it is used. Nor need it be used all year round. If it is used, it must not be used exclusively for holiday or recreational purposes. There is no requirement to set up a primary residence (main place of residence).
I. Italy:
Can Italians (including people from South Tyrol) acquire land in Austria, and in particular in Tyrol, in the same way as Austrians?
Thanks to European Union law, Italian nationals, and hence also people from South Tyrol, are treated no differently to Austrians, and thus can acquire land in Austria, in particular in Tyrol, by virtue of the free movement of capital. The Commissioner for the free movement of capital at the time, Prof. Mario Monti, insisted that there should be no discrimination of Italians, in particular those from South Tyrol, in particular in the acquisition of land in Tyrol.
J. Joint ownership:
If agricultural or forestry land is acquired in joint ownership, provided the other conditions are satisfied there is no need even to confirm that the proper cultivation of the land will be guaranteed. In my view, this constitutes an unacceptable privilege as against purchasers who are not already joint owners of agricultural or forestry land.
L. Land Transaction Board:
The Land Transaction Board is a tribunal (in camera court) set up as a court within the meaning of the European Human Rights Convention and decides at second instance on the acquisition of real estate in Tyrol. In other federal provinces, the functions of this authority are exercised by the “Independent Administrative Board” (Unabhängigen Verwaltungssenat – UVS). An appeal against decisions of the Land Transaction Board in the field of “green” land transactions (agriculture and forestry) lies only to the Constitutional Court and not to the Administrative Court, a fact that I have always criticized as a restriction on legal protection.
M. Main place of residence (primary residence):
If I want to acquire real estate in Austria, in particular in Tyrol, must I set up my primary residence (main place of residence) there?
No, this is not necessary. The local authorities will be grateful if you do set up your main place of residence there, because they then receive more funds from the central government, but there is no requirement to make Tyrol your primary residence (main place of residence) for land transactions (i.e. the purchase of land).
O. Obligation to build:
When undeveloped building land is acquired in Austria, in particular in Tyrol, an obligation to build within five years is imposed. This period can be extended once for a further period of five years if there are important reasons. My view is that this regulation is in breach of the Constitution, and I have submitted a number of appeals to the Constitutional Court for clients on this topic. I am arguing that it is not only the authorities’ refusal to extend the period if certain deadlines are missed, but also the imposition of the obligation to build itself that is unlawful.
R. Residency requirement:
The residency requirement, the obligation to live on the farm, has been repealed by the European Court of Justice as being in breach of the free movement of capital.
T. Transfer to a foundation:
The free movement of capital means that any person, irrespective of nationality, company registered office or other preconditions can acquire agricultural and forestry land in Austria, in particular in Tyrol, if proper cultivation is guaranteed. The transfer of agricultural and forestry assets to a foundation is also a case of the free movement of capital.