AUSTRIA Law and Practice

Contributed by: Markus Fellner, Florian Kranebitter and Mario Burger, Fellner Wratzfeld & Partners

Pursuant to the Austrian Stamp Duty Act (Gebührengesetz), Austrian stamp duty applies for certain transactions (eg, the assignments of receivables, sureties, mortgages) if a document is drawn up that is evidencing the transaction as well as an Austrian connection is established. Special care has to be taken in relation to several finance documents commonly used in acquisition financings/LBOs.

Effective since or after 1 January 2011, loan and credit agreements are not subject to Austrian stamp duty. Therefore, a significant potential tax burden and risk has been removed from granting loans to Austrian borrowers.

Thus, a loan agreement itself is not subject to Austrian stamp duty, but it may refer to other agreements which are subject to stamp duty. Certain types of security arrangements (eg, suretyships and assignments) would also be subject to stamp duty if they are either executed in Austria or any other action is taken which establishes an Austrian connection.

An Austrian connection exists either if finance documents are signed or handed over in Austria, or if a document is signed outside of Austria (documentation abroad) and has a personal or factual domestic reference.

Personal domestic reference means that all contracting parties have their domicile/management/place of business in Austria. Factual domestic reference means that if the legal transaction concerns a domestic object or has a domestic place of performance.

A stamp duty may also be triggered by references to any finance documents that contain stampable transactions or refer to stampable transactions in another written document (sub- stitute documentation – Ersatzbeurkundung). The referenced legal transaction become the content of the written document for stamp duty purposes. Therefore, a mere reference in any form (eg, letter, paper, email, fax) is sufficient to trigger that risk.

Care has also to be taken in relation to abstract guarantees and sureties (see also 6.1 Types of Guarantees). While an abstract first demand guarantee (including a waiver of all defences) is not subject to stamp duty, a suretyship or an assumption of debt as co-debtor (accessory personal security), for example, triggers stamp duty.

Debt funding may be subject to Austrian stamp duty as well, if it is structured by way of the acquisition of the loan receivables (on a commercial basis). However, various structuring possibilities are available (such as documentation abroad, ie, execution and permanent safekeeping of transaction documentation, certified copies, outside of Austria and strict avoidance of creating “substitute documentation”) in order to avoid triggering stamp duties in those cases.

Risk Mitigation Measures

Various legally permissible structures exist to avoid triggering stamp duties (or to at least reduce stamp duty risk). The most important avoidance structure regarding finance transactions is to set up documentation abroad (Auslandsbeurkundung) to prevent the existence of an Austrian connection. For this reason, the finance documentation should include a respective stamp duty warning on the cover page, a stamp duty clause that allocates the stamp duty risk to one party and a place of performance clause.