Secondary Residences in Tyrol: Where Are We Headed?

Few topics in Austrian property law are as complex and consequential for buyers as the secondary residence (Freizeitwohnsitz) issue in Tyrol. The Tyrolean Spatial Planning Act (TROG) and the Tyrolean Land Transfer Act (TGVG) together form a restrictive regime that significantly limits the use of residential property as a secondary residence — and not only for foreign nationals.

What Constitutes a Secondary Residence?

A secondary residence (Freizeitwohnsitz) within the meaning of § 13 TROG is a dwelling or residential property that does not serve to satisfy a year-round housing need connected to the centre of a person's life, but is used primarily for recreational or leisure purposes. The line is difficult to draw in individual cases: a buyer who transfers their primary residence to Tyrol can prevent the classification as a secondary residence. Those who maintain multiple residences, however, must demonstrate where their actual centre of life is located.

The Tyrolean authorities apply these provisions strictly. Someone who lives in two homes in two different countries will quickly be classified as a secondary residence holder in Tyrol — with far-reaching consequences for permit requirements and permitted uses.

The Kitzbühel Precedent

The international attention the issue has attracted is due in no small part to cases like those in Kitzbühel, where wealthy foreign buyers acquired properties and disregarded official restrictions on use. The authorities responded with fines and prohibitions on use. At the same time, the ECJ has made clear in several decisions that national restrictions on the acquisition of land must be measured against EU free movement of capital rules.

EU Free Movement of Capital and National Restrictions

The EU free movement of capital (Art. 63 TFEU) prohibits restrictions on the movement of capital and payments between Member States, as well as between Member States and third countries. The ECJ held in Ospelt (C-452/01) that national rules restricting the acquisition of land may be permissible where they serve legitimate objectives such as spatial planning or agricultural use — but they must be proportionate.

In my view, the current practice in Tyrol of categorically prohibiting secondary residences and refusing even EU citizens the use of a lawfully acquired property for leisure purposes is contrary to EU law. The final word on this question has not yet been spoken.

Options for Buyers

For buyers who wish to acquire a property in Tyrol for their own use, various legal structuring options exist. A careful examination of the intended use, the zoning of the property and the buyer's personal circumstances is essential. In some cases, occasional rental to tourists can be a lawful alternative to purely private use; in others, a corporate structure is advisable.

Those who do not clarify these questions in advance risk not only regulatory sanctions, but also acquiring a property that they are legally unable to use as they had intended.