Free Movement of Capital and Property Acquisition in Austria

One of the most widely discussed topics in Austrian property law is whether, and under what conditions, foreign nationals may acquire land in Austria. The answer is less restrictive than many assume — and less clear-cut than the competent authorities in Tyrol sometimes suggest.

The Principle: Free Movement of Capital Applies to Everyone

Art. 63 TFEU prohibits all restrictions on the movement of capital between Member States, as well as between Member States and third countries. The Court of Justice has given concrete form to this principle in a series of decisions. For the acquisition of land, this means: not only EU citizens, but also nationals of third countries have the right to acquire property in Austria. The same applies to legal entities, regardless of their registered seat.

This far-reaching scope of the free movement of capital is frequently ignored or interpreted too narrowly by Austrian authorities — in particular by the land transfer authorities (Grundverkehrsbehörden) in Tyrol.

The Ospelt Decision and Its Consequences

The Court of Justice held in Ospelt and Schlössle Weissenberg (C-452/01) that even restrictions aimed at maintaining a productive agricultural sector must be measured against the free movement of capital and must be proportionate. The case concerned the acquisition of agricultural land by a Liechtenstein foundation. The ECJ found that Liechtenstein — although not an EU member but part of the EEA — benefits from the free movement of capital.

The significance of this decision extends well beyond the individual case: it makes clear that national restrictions on the acquisition of land are subject to justification and proportionality requirements under EU law. A blanket prohibition on land acquisition by foreign nationals would be contrary to European law.

Practical Implications for German, Italian and International Buyers

For the majority of buyers from Germany, Italy and other EU countries, the free movement of capital means in practice that the acquisition of residential property, commercial property and — with certain limitations — agricultural land in Austria is in principle permissible. The Grundverkehrsbehörde may not refuse approval on the grounds of nationality or registered seat alone.

Nevertheless, approval requirements remain in Tyrol that must be examined on a case-by-case basis. In particular, the secondary residence (Freizeitwohnsitz) issue and zoning regulations constitute independent legal questions that are unaffected by the free movement of capital.

Remaining Restrictions

The free movement of capital does not exempt buyers from compliance with national procedural requirements. The acquisition of land in Tyrol remains subject to the approval requirement under the TGVG. The Grundverkehrsbehörde is, however, obliged to grant approval where no legitimate ground for refusal exists. Restrictions that are based solely on the foreign nationality of the buyer, without objective justification, are contrary to EU law and can be challenged.

How We Support Buyers

As a law firm specialising in Austrian property law, we have daily experience of the practices of the Tyrolean land transfer authorities. We examine in advance what approval requirements exist in a particular case, accompany approval proceedings, and where necessary challenge unlawful refusals. For international buyers in particular, this preliminary examination is indispensable to avoid costly surprises after contracts have been concluded.