Lease agreement subject to stamp duty based on 21 times the annual value

A GmbH entered into a lease agreement with the City of Vienna for certain premises. The agreement was concluded for an indefinite term, with the tenant being granted an annual right of termination, while the landlord’s right of termination was restricted to important grounds in accordance with the full scope of the Austrian Tenancy Act (Mietrechtsgesetz, MRG).

The tenant, in turn, contractually waived its right of termination for the next 25 years. The GmbH therefore took the view that the stamp duty should be calculated on a maximum of 18 times the annual rental value, whereas the tax authority assessed the duty based on 21 times the annual rental value.

Background

Written lease agreements (excluding residential lease agreements), tenancy agreements, and leasing agreements are subject to Austrian stamp duty. The assessment basis is calculated using the annual value of recurring payments multiplied by the term of the agreement, plus any one-off payments.

The applicable multiplier depends on whether the agreement is concluded for a definite or indefinite term. For agreements with a definite term, the agreed duration is used, capped at a maximum of 18 times the annual value. For agreements with an indefinite term, the assessment basis is calculated using three times the annual value.

Decision of the Supreme Administrative Court

The Austrian Supreme Administrative Court (Verwaltungsgerichtshof, VwGH) clarified that, for stamp duty purposes, the provisions of the Austrian Stamp Duty Act (Gebührengesetz) take precedence over those of the Valuation Act (Bewertungsgesetz). Consequently, the Valuation Act applies only where the Stamp Duty Act does not contain a specific provision.

Lease agreements concluded for an indefinite period, but containing an initial waiver of termination rights for a specified period, must be treated as agreements with a definite term for the period covered by the waiver and as agreements with an indefinite term thereafter.

The Court emphasized that the agreement is not split into two separate contracts requiring independent declarations of intent. Rather, a single agreement contains two distinct components relating to its duration: first, a period of definite duration, followed by a period of indefinite duration.

Accordingly, in such cases the stamp duty must be calculated on the basis of 18 times the annual value for the definite-term portion of the agreement, plus three times the annual value for the subsequent indefinite-term portion.

As a result, where a lease agreement is structured in this manner, the stamp duty may be calculated on a maximum of 21 times the annual value of the recurring payments.

Conclusion

The VwGH’s decision is consistent with its established case law regarding the determination of the stamp duty assessment basis for agreements that include a waiver of termination rights and combined fixed and indefinite contractual terms.

The cap of 18 times the annual value does not constitute an absolute maximum. Rather, it applies only to the portion of the agreement concluded for a definite term. For the subsequent indefinite-term period, an additional three times the annual value must be taken into account.