Buying or selling an apartment building in a GmbH: share deal, real estate transfer tax and guarantees

Where an apartment building sits inside a GmbH, the real estate purchase contract is often replaced by the sale of the GmbH shares. This share deal has different legal effects from an asset deal. The land register is not amended because the property stays with the GmbH. What changes is the shareholder position, and with it the economic allocation of income, risks and taxes.

This article sets out the review axes. It covers the treatment under real estate transfer tax law (section 1(3) of the Real Estate Transfer Tax Act, Grunderwerbsteuergesetz, GrEStG), the special rules for real estate companies in force since 1 July 2025, the corporate law structure of the share purchase agreement under the Austrian GmbH Act (GmbHG) and the warranties, indemnities and purchase-price retentions typical for a share deal.

Share deal and asset deal: legal structure

In an asset deal the property itself is sold. The purchase contract deals with the apartment building, the price, warranties and handover. The land register is amended, and the priority notation under section 53 of the Land Register Act (Grundbuchsgesetz, GBG) can support the buyer's financing. The buyer owes real estate transfer tax under section 1(1) GrEStG at the general rate on the consideration.

In a share deal the shares in the GmbH that owns the apartment building are sold. The property remains with the GmbH, and the land register is not changed. The buyer takes over the GmbH with all rights and obligations of the legal entity, including balance sheet items, tax debts, contracts, provisions and any open audits. This bundling is a key reason for a careful contract review: the buyer does not merely acquire a property, but a company with its full history.

For the practitioner the model choice is therefore an aggregate decision. Real estate transfer tax, side costs, land register handling, liability, warranties and balance sheet history are weighed together. The topic page Due diligence and data room orders the underlying documents.

Real estate transfer tax in a share deal: section 1(3) GrEStG and the reform from 1 July 2025

Since 1 July 2025, section 1(3) GrEStG catches, among other events, a direct change of shareholders in which at least 75 percent of the shares pass to new shareholders within seven years. It also covers specified direct or indirect consolidations and transfers of at least 75 percent of the shares. Until 30 June 2025 the central threshold was 95 percent. The reform also introduced a separate regime for real estate companies.

The specific tax rate and the tax base differ between the general share deal, the real estate company regime and privileged constellations within a family group. The specific calculation is a tax task that must be run carefully on an object-by-object, structure-by-structure basis. The article deliberately does not fix percentages because the calculation must be done on the actual case.

For the contract this makes the regime doubly relevant. First, the parties must check whether and when a taxable consolidation of shares or a change under the real estate company regime is triggered. Second, the share purchase agreement must arrange cost allocation, aggregation with further share acquisitions and the formal tax filing.

Share purchase agreement: GmbH Act and form requirements

Under section 76(2) GmbHG the assignment of a GmbH share requires a notarial deed. The assignment becomes effective in accordance with that deed and its agreed closing conditions. Section 26 GmbHG then requires the managing directors to file the evidenced transfer with the commercial register. The register entry records the change but is not constitutive of the assignment.

In substance the share purchase agreement is broader than a real estate contract. It typically covers price and adjustment mechanics, closing conditions, warranties on the company and the property, indemnities for tax and litigation risks, non-compete provisions, merger control clauses and handover rules. On top come the classic real estate topics: rent roll, leases, building file, service charges, deposits and insurance.

It pays off to interlock the corporate and the real estate part. The topic page Rent roll and lease agreements orders the property-specific topics; they remain the review standard even inside a share deal.

Warranties, indemnities and purchase-price retention

Warranties in a share deal are contractual statements by the seller on facts for which the seller wants or must stand in. Typical topics include existence and freedom from encumbrance of the shares, correctness of the balance sheet, completeness of the rent roll, alignment with the building file, compliance with tax filings and absence of pending proceedings. For each warranty the parties negotiate the time frame, the liability cap and the claim mechanism.

Indemnities are a specific instrument for known risks. Where a tax audit is expected or a rent-related dispute is pending, the seller may commit to an indemnity for specifically identified risks. Indemnities are economically strong and legally effective when they are drafted precisely and combined with a proper security.

A purchase-price retention secures the buyer's claims under warranties or indemnities. Bank guarantees or escrow arrangements can be used instead of or alongside a retention. The topic page Handover and effective date orders the time anchors that securities attach to.

Latent tax, balance sheet history and audit risk

A core topic of any share deal is so-called latent tax. Where hidden reserves sit inside the apartment building, they remain in the GmbH and become taxable on a later sale of the property. The buyer takes over the GmbH including this position. For price negotiations the treatment of latent tax is decisive: as a price discount, a provision, a warranty item or a combined solution.

The balance sheet history matters in addition because open tax audits, unresolved VAT topics and provisions shape the later financial situation. The share purchase agreement responds through warranties on balance sheet correctness and tax filing compliance and through tax indemnities. In addition, a proper handover of the accounting records is helpful, so the buyer can run both the GmbH and the property.

On the seller side it pays off to work through balance sheet, provisions and tax history before the sale process starts. This reduces price discounts driven by uncertainty and allows warranties to be drafted cleanly.

Signing, closing and commercial register execution

Signing and closing of a share deal rarely fall on the same day. At signing the share purchase agreement and ancillary deeds are executed before a notary, open conditions precedent are listed and the parties' performance obligations are fixed. Between signing and closing the parties work through the closing conditions, such as consents of co-shareholders under the articles of association, merger control filings where required, provision of the purchase price and confirmation from the bank to the buyer that the collateral is in place for the refinancing.

At closing the parties confirm that the conditions precedent have been satisfied, the payment of the price is released and the assignment of the shares becomes effective. The subsequent filing with the commercial register under section 26 GmbHG makes the new shareholder position publicly visible. The tax filing for real estate transfer tax under section 10 GrEStG runs in parallel and independently from the register filing; the deadlines run from the date of the taxable event.

Economically the interim period matters. During this phase the apartment building is still legally with the seller but economically oriented towards the buyer. Provisions on interim income, distribution restrictions, investment limits, restraint on termination of leases and reporting to the buyer are therefore common. For apartment buildings with an ongoing service charge period, a clear rule on the handover of the current accounting is helpful in addition.

Practical flow and next steps

A share deal on an apartment building starts with a clean map: model choice, tax planning, contract structure, balance sheet and audit history, real estate documents, warranties and securities. It continues with the notarial deed, the commercial register filing, the handover of documents and the interface with the existing property management. Even though the land register is not amended, the closing phase remains demanding.

On the buyer side the data room completeness check orders the document review. On the seller side the apartment building risk check gives a first structured view of the property side. BRANDAUER Rechtsanwälte accompanies buyers and sellers through the contractual implementation.