After today’s unexpected referendum result to leave the EU, UK buyers are asking about the repercussions when buying property in Austria.  Below we have listed a few pointers which may help when deciding to invest in Austrian property.

2016 is still a good time to invest in Austria:  this year Austria will receive another record number of summer and winter tourists from inside and outside the EU which will drive local investment in tourism infrastructure and support growth in rental income by our fully-managed rental programme.  On the back of these positive numbers we predict the solid capital growth within the Austrian tourism property market to continue: 16.5% in the last 4 years versus a fall of 5.7% in France (source: Knight Frank, June 2016).

No real change for UK buyers in the short term: if Article 50 is triggered by the UK government, we predict no change for the following two years as we negotiate our exit and trading relationship with the EU.  Purchases before conclusion of the exit will not be affected retrospectively – once you are in Land Registry your ownership cannot be reversed.  UK buyers should always consider the Sterling / Euro exchange rate to ensure they negotiate a good deal when converting their currency but there are many outside factors which affect the exchange rate and we predict Sterling will strengthen once the uncertainty has been removed.

Non-EU citizens are already buying our Austrian properties: should a UK buyer’s status in Austria change once we have left the EU, non-EU citizens may buy Austrian properties through limited companies with a registered office inside the EU and there is no requirement for the shareholder to be a European citizen.  Furthermore, with 1.2m UK citizens living in EU member states and 2.9m EU citizens living inside the UK, we predict both the EU and UK governments will agree a fair deal for both sides without delay.

Tax:  the UK has an extensive network of international double tax treaties. The double tax treaty with Austria will remain unaffected.  To provide balanced and accurate advice to our clients, Kristall Spaces has negotiated a very reasonable tax package with an Austrian accountancy firm specialising in tourism rental properties.  UK buyers may engage the tax advisors at the time of purchase to ensure a seamless registration with the Austrian tax authorities and advise on local tax issues during the purchase and process VAT rebates and tax returns.

Mortgages: Austria has always welcomed British buyers who invest in their tourist destinations.   All Kristall Spaces apartments come with a rental obligation and the tax authorities waive the 20% VAT on the purchase price in return for your agreement to rent the property and support the growing numbers of visiting tourists to the resort (40million people per annum).  Your property is classified as a small business and the rental income may be used to service a mortgage with a local bank. Financing a part of your purchase in Euros and servicing the mortgage with Euro rental income acts as a ‘hedge’ against Sterling / Euro exchange rate fluctuations.

About Kristall Spaces ski properties: we carefully choose our developments in high demand locations so they sell out fast (95% before construction is complete).  We have an international mix of owners from inside and outside of the EU who choose our ski apartments (average Price per sqm € 5,500 – except St Anton € 11,500) based on their affordability compared to Swiss and French resorts, access to high altitude slopes / glaciers and increasingly their dual season status (Oetz receives nearly as many visitors in summer as winter).

UK buyers looking to buy property in the Austrian Alps are asking lots of questions but not being put off by a potential Brexit.

According to a recent survey conducted by A Place in the Sun, 70% of Brits say that Britain leaving the EU would not prevent or even postpone their plans to purchase a second home in Europe.

The effect of a Brexit and the free movement of capital from the UK to the European Union is likely to be minimal for a number of reasons.

Here are some of the key questions and answers from UK buyers.

If I buy now and we Brexit, what happens with my ownership rights as non-EU citizens cannot personally buy in Austria?

This is not quite true. Non EU-citizens can buy property in Austria.

The right to buy or own property in the EU by a Brit is not going to be materially diminished, whatever happens.

Should we vote to leave the EU in June 2016 (40% probability according to HSBC and UBS) it will take at least two years for the exit to take effect, during which time you retain the same rights as any EU citizen.

Furthermore, there are 1 million Brits who own properties in the EU and lots of EU owners here, so it is extremely unlikely that the host countries will suddenly impose restrictions.

Swiss or Norwegians have not been penalised and there are lots of Americans, Russians and Chinese with property in Europe.

In any event, you can opt to buy property through a limited company which has a registered office inside the EU and it is no longer necessary for the shareholder or ultimate beneficiary to be a European citizen.

Will the double tax treaty with Austria still be in place if we Brexit or could I end up paying tax on my rental income twice and future capital gains etc?

A Brexit would have no impact on the UK’s extensive double tax treaty network, which is not based on EU membership.

The double tax treaties we have signed with EU countries will remain unaffected because the agreements to ensure people are not taxed twice on the same money are made individually with each country.

Should I buy now or wait in case we don’t Brexit and the exchange rate gets better? 

The Sterling / Euro exchange rate will see some fluctuation between now and June depending on the polls but the cost of a Brexit has been mostly factored into the equation by the large institutions.

For added security buyers can lock in today’s exchange rate for the next two years by paying a deposit of 5 to 10% now.  Our Forex partner can assist with this.

Should I take out an Austrian euro mortgage or a UK mortgage?

European banks have strong lending divisions that have created mortgage products aimed at UK buyers and these will continue even if Brexit happens.

Austria welcomes British buyers who invest in their tourist destinations and even after Brexit, a British buyer would find it easy to get a mortgage in Austria.

Kristall Spaces apartments come with a rental obligation when owners are not using the property and local tax authorities waive the 20% VAT on the purchase in return for your agreement to rent the property and support the growing numbers of visiting tourists to the resort (40million people per annum).

The status of a rental property means your apartment is classified as a going concern and the rental income in Euros can be used to pay down your Euro based mortgage, which acts as a hedge against any future exchange rate fluctuation.

Kristall Spaces has negotiated a very reasonable tax package with an Austrian accountancy firm specialising in tourism residences.

You can engage the tax advisors at the time of purchase.

They will register you for VAT in Austria, advise you on tax issues during the purchase process and handle your VAT and Tax returns in the future.

Still unsure or want to discuss other aspects with us?  Please contact us today.