Buying a business in Austria
Buying and leasing a property or business in Austria.
In Austria, our skilled Negotiators have extensive experience of their local and national markets, as well as in-depth knowledge of current legislation and trends.
Firstly, no matter what business you're planning to buy, you should research it thoroughly, especially the location. Also, the price should be verified, preferably by an expert. In Austria, the cost of this valuation is usually borne by the party buying the property.
It is very important to have the building inspected, both from a technical and structural point of view.
In addition, due diligence should include an examination of the most recent trading figures, the capital expenditure programme and all the contracts and agreements relating to the business.
PURCHASE CONTRACT
When all these details have been checked, a purchase contract is compiled by a notary or lawyer. A purchase contract in Austria has to designate the parties, the real estate and either the purchase price or the method of its calculation. Other terms customary for purchase contracts are representations and warranties, the agreement concerning the acceptance of encumbrances, the appointment of an escrow agent and the obligation to register priority notices.
As part of a real estate transaction in Austria, the seller has to formally approve the registration of the buyer in the Land Register. The seller usually grants this consent in the purchase agreement, although it may also be granted in a separate document. The agreement to register has to be made in writing and must be certified by a District Court or a notary public.
The purchase contract, and any accompanying papers, should be checked thoroughly. If you are not German-speaking it is advisable to have these papers translated professionally, even if this is at additional cost.
The terms of the buying contract can be very variable. This is why a contract needs to be checked by someone experienced in selling and buying a business in Austria. There are many legal obligations but also legal details, which can be either an advantage or disadvantage to the purchaser.
There is also a difference whether a property (asset deal) or a business holding a property (share deal) is purchased. In the first case, the notary only has to verify the involved parties’ signatures, whereas in the latter case a notary deed has to be drawn up, which is significantly more expensive.
THE “GRUNDBUCH”
In Austria, the entire surface is covered by the Land Register (“Grundbuch”) which is kept by the district courts. Certified extracts of the Land Register (including related purchase contracts) can be obtained by the public from any District Court and notary publics, and electronic extracts can be obtained from any other institution with access to the electronic database.
Under Austrian law any grant, transfer or limitation of rights pertaining to real estate property generally has to be registered in the relevant Land Register in order to become effective vis-a-vis third parties. Therefore, ownership of property may only be transferred on the basis of a legal title (eg purchase contract) by registration in the Land Register. There are a very limited number of exceptions to this principle where the title passes over without an entry in the Land Register. In addition to the notary’s fees, which depend on the type of purchase, the business agent’s commission has to be paid on the “Notary Date”. This is usually around 3% of the purchase price, plus VAT.
Additionally, the real estate transfer tax (Grunderwerbssteuer) on the business needs to be paid. This is 3.5% of the total value of the transaction stated in the contract. This tax must be paid quickly after being requested, otherwise the tax office will not issue the “clearance certificate” - an important document for transferring the ownership from the seller to the buyer and without which the transfer cannot take place.
Meanwhile, the registration fees for the Land Register have to be paid. These comprise about 1.0% of the purchase price of the real estate.
NOTE
During the process of buying a business in Austria, prospective purchasers are advised to seek timely advice from appropriate professionals and specialists (eg accountants, solicitors, valuers, surveyors, business agents, business finance brokers, stocktakers, etc). Reading this section of the website in no way obviates the need to seek such advice or find out the latest information. Christie + Co accepts no responsibility or liability for any loses incurred in any business venture or other investment conducted by the reader whatsoever.
