Business Succession Tax: Sale, Gift, Inheritance (2026)

Tax on business succession looks entirely different depending on whether you sell, give away or bequeath — and it often co-determines what is left net in the end. Austria has had no inheritance or gift tax since 1 August 2008; on a sale, the gain on disposal is subject to income tax, with reliefs (allowance, three-year spreading or half-rate taxation) under certain conditions.

First the most important point: this article outlines the basics for Austria, sets the German counterparts beside them and does not replace tax or legal advice. The actual burden depends on the individual case and belongs in the hands of a tax advisor and a lawyer — early, not at the end. How we prepare a transfer to family or buyers from a tax perspective, without providing tax advice ourselves, is described on our service page.

Which taxes apply to business succession in Austria?

A sale triggers income tax on the gain on disposal; a gift or inheritance triggers no inheritance or gift tax, but in both cases real estate transfer tax (Grunderwerbsteuer) applies as soon as land is transferred as well. Which relief applies depends on the age of the transferor, the duration of the business and whether the transfer counts for tax purposes as paid or unpaid.

Transaction	Tax	Main relief	Legal basis	Source, retrieved
Sale of the entire business	Income tax on the gain on disposal	Allowance of EUR 7,300	§ 24 para. 4 EStG 1988	RIS, 28.09.2026
Sale after at least seven years	Income tax	Spreading of the gain over three years	§ 37 para. 2 EStG 1988	WKO, as of 01.02.2026
Sale or cessation from age 60 with discontinuation of gainful activity, on incapacity to work or death	Income tax	Half-rate taxation (half the average tax rate)	§ 37 paras. 1 and 5 EStG 1988	RIS, 28.09.2026
Gift or inheritance	no inheritance or gift tax	Notification duty for gifts from EUR 50,000 per year among relatives	gift notification	WKO, as of 13.01.2026
Land in the business, transferred without consideration	Real estate transfer tax	Graduated rate 0.5 / 2 / 3.5 percent	§ 7 para. 1 no. 2 lit. a GrEStG 1987	RIS, 28.09.2026
Land on transfer of a business (transferor aged 55 or older, or incapable of work)	Real estate transfer tax	Allowance of EUR 900,000, tax at most 0.5 percent	§ 3 para. 1 no. 2, § 7 para. 1 no. 2 lit. b GrEStG 1987	RIS, 28.09.2026

Sources: § 24 EStG 1988, § 37 EStG 1988, § 3 GrEStG 1987, § 7 GrEStG 1987, all retrieved on 28.09.2026; WKO, tax reliefs on business sale, cessation and transfer, as of 01.02.2026; WKO, tax questions from the transferor's perspective, as of 13.01.2026.

The three income tax reliefs largely exclude one another: whoever chooses the three-year spreading or the half-rate taxation loses the allowance (§ 24 para. 4 EStG 1988). Which variant is more favourable can only be answered with a comparative calculation. For sole proprietorships and one-person businesses, the article tax reliefs when selling a sole proprietorship sets out the options with sources.

Sale: the gain on disposal

If you sell your business, the gain on the disposal is in principle subject to income tax. It results from the difference between the purchase price and the book value of the business assets, reduced by the costs of sale — for tax purposes, the hidden reserves that have accumulated over the years in machinery, land and goodwill are uncovered at that moment.

Allowance: The gain on disposal is taxable only to the extent that it exceeds EUR 7,300 on the sale of the entire business (§ 24 para. 4 EStG 1988). For a mid-sized business this is a small relief; the WKO describes the allowance as worthwhile only if the gain does not substantially exceed this amount.

Half-rate taxation (Hälftesteuersatz): The tax rate is halved to half the average tax rate applicable to total income if the transferor has died, is incapable of work or has reached the age of 60 and discontinues his or her gainful activity. In addition, seven years must have elapsed since the opening of the business or the last acquisition for consideration (§ 37 para. 5 EStG 1988).

What “discontinuation of gainful activity” means: The WKO gives as limits total revenue of at most EUR 22,000 and total income of at most EUR 730 per calendar year from activities that continue to be carried on. Pensions, rental income and capital income are harmless, whereas a managing director position with the buyer or a new self-employed activity is not. It is precisely here that the relief most often fails in practice — for example when the transferor remains in the business as a paid advisor after the sale.

Gift or inheritance within the family

There has been no inheritance or gift tax in Austria since 1 August 2008. The family-internal transfer of business assets by gift or inheritance is therefore often more attractive for tax purposes than a sale. For income tax purposes, in an unpaid transfer the successor continues the book values (§ 6 no. 9 lit. a EStG 1988) — the hidden reserves are not uncovered but pass to him or her with the business.

Two points still have to be observed:

1. Notification duty: Gifts must be notified to the tax office, among relatives from EUR 50,000 within one year, among non-relatives from EUR 15,000 within five years (WKO, as of 13.01.2026).
2. Real estate transfer tax: If real estate belongs to the business, real estate transfer tax applies. For an unpaid acquisition a graduated rate applies: 0.5 percent for the first EUR 250,000, 2 percent for the next EUR 150,000, 3.5 percent above that. For business transfers there is in addition an allowance of EUR 900,000 if the transferor has reached the age of 55 or is incapable of work, and the tax is then at most 0.5 percent of the land value (§ 3 para. 1 no. 2, § 7 para. 1 no. 2 lit. b GrEStG 1987). If the business is passed on within five years, the WKO says that a subsequent levy of real estate transfer tax is possible.

Paid or unpaid? The decisive switch

Whether a transfer counts for tax purposes as a sale or a gift depends on the ratio of the consideration to the value — with different thresholds depending on the type of tax:

Type of tax	Unpaid	In between	Paid	Source
Income tax (transfers after 15.11.2021)	Consideration up to 25 % of the value	among relatives in principle unpaid	from 75 % of the value	VwGH 16.11.2021, Ro 2020/15/0015; EStR-Wartungserlass 2023, presented by LBG, 27.06.2023
Real estate transfer tax	Consideration up to 30 % of the land value; acquisitions within the family circle and by succession always	partly paid above 30 % to 70 %	above 70 %	§ 7 para. 1 no. 1 GrEStG 1987, RIS, 28.09.2026

Sources: LBG, paid or unpaid transfer, retrieved on 28.09.2026; § 7 GrEStG 1987, retrieved on 28.09.2026.

The same transfer to a non-family successor can therefore be classified differently for income tax than for real estate transfer tax. For transactions before 16.11.2021 a 50 percent threshold still applied to businesses for income tax purposes — whoever relies on older information sheets calculates with wrong thresholds. The prerequisite for each of these classifications is a reliable value: without a business valuation as the basis for distinguishing paid from unpaid the ratio cannot be determined at all.

Patterns from practice: where the tax question tips

Three constellations recur in transfers of mid-sized businesses. They are described here without reference to individual mandates.

1. The transferor stays on board as an advisor. An owner over 60 sells the business and agrees in the same contract on paid advisory work for two years. Gainful activity is thus not discontinued, and the half-rate taxation lapses. Remedy: arrange the transition support without pay or within the WKO limits — and calculate this with the tax advisor before signing.

2. The business premises within the family. The daughter takes over the business including the hall against a payment. For real estate transfer tax, an acquisition within the family circle always counts as unpaid, regardless of the amount of the payment — the graduated rate then applies and, for a transferor aged 55 or older, the allowance of EUR 900,000 for business transfers. The trap lies in the detail: the allowance presupposes that the land is transferred together with the business. Whether a hall held privately and leased to the business falls under it must be clarified before the contract is drafted. Remedy: value property and business separately and fix the allocation with the tax advisor and notary.

3. The seven-year period is narrowly missed. Whoever acquired the business for consideration only six years ago receives neither half-rate taxation nor three-year spreading. Remedy: align the timetable with the period if the sale is not urgent.

Germany and Austria compared

Many owners in the DACH region have buyers, shareholders or permanent establishments on both sides of the border. The basic logic is similar, the figures are not:

Point	Austria	Germany	Source, retrieved
Allowance on the gain on disposal	EUR 7,300, no age limit	EUR 45,000 from 55 or on permanent incapacity to work, once in a lifetime, phased out from EUR 136,000 of gain	§ 24 para. 4 EStG 1988; § 16 para. 4 EStG
Reduced tax rate	Half the average tax rate, from 60 with discontinuation of gainful activity	56 % of the average tax rate, at least 14 %, from 55, for gains up to EUR 5 million, once in a lifetime	§ 37 para. 5 EStG 1988; § 34 para. 3 EStG
Inheritance and gift	no inheritance or gift tax	Inheritance and gift tax; business assets with a relief discount of 85 %, on application 100 %	§ 13a paras. 1 and 10 ErbStG

Sources: RIS (see above); § 16 EStG, § 34 EStG, § 13a ErbStG, all retrieved on 28.09.2026.

Those transferring in Germany will find the classification under Business succession in Germany with the allowance under § 16 EStG; the conditions of the relief — payroll total, holding period, administrative assets — are explained in Relief regime: how business assets stay tax-free on transfer. The Austrian particularities are gathered on the page on business succession in Austria with a view to allowances and half-rate taxation.

Why the structure decides early

Whether sale, mixed transfer or gift: the tax effect is fixed in the structure, not repaired afterwards. Whoever raises the tax question only shortly before closing has already forfeited many structuring options — the seven-year period, the age limits of 55 and 60 years and the five-year period for real estate transfer tax cannot be met retroactively.

That is why it belongs at the start of succession planning — in parallel with the question of timing and the choice of the transfer route. How succession as a whole proceeds is put in context by “Business transfer: the guide”. For members of the professions, separate rules apply — see our page on practice succession in tax advisory.

A sensible order for the preparation:

1. Determine the value of the business, separately for business and real estate — estimating the value of the business before the transfer gives a first reference point.
2. Fix the transfer route: sale, gift or mixed transfer.
3. Check the periods: seven years since opening or acquisition, age limits 55 and 60, five-year holding period for real estate transfer tax.
4. Comparative calculation with the tax advisor: allowance, three-year spreading or half-rate taxation.
5. Only then negotiate the contract and the purchase price structure.

A clear note

Tax law changes, and every case is different. Everything mentioned here is an orientation as of the legal position on 28.09.2026, not a substitute for individual advice. The binding assessment — and the structuring that really benefits you — is provided by the tax advisor and the lawyer.

In Germany, the relief for business assets is currently under review by the Federal Constitutional Court – see inheritance tax before the Federal Constitutional Court. What else changes in both countries in 2027 is set out in tax changes in 2027 for business sellers.

Whether a gift before the Karlsruhe ruling makes sense is assessed in the article gifting a business before the inheritance tax ruling.

Frequently asked questions

Which taxes apply to business succession in Austria?

On a sale, the gain on disposal is subject to income tax, with possible reliefs: an allowance of EUR 7,300, spreading over three years or half-rate taxation from 60 with discontinuation of gainful activity, on incapacity to work or death. On a gift or inheritance there is no inheritance or gift tax, but real estate transfer tax on land transferred as well.

Is there an inheritance or gift tax in Austria?

No, it lapsed with effect from 1 August 2008. Gifts must be notified, however: among relatives from EUR 50,000 per year, otherwise from EUR 15,000 within five years. What remains relevant above all is real estate transfer tax if real estate belongs to the business.

When does a transfer within the family count as a sale?

For income tax purposes, if the consideration reaches at least 75 percent of the value; up to 25 percent it is an unpaid transfer, and in between it counts among relatives in principle as unpaid. For real estate transfer tax the thresholds are 30 and 70 percent; acquisitions within the family circle always count as unpaid there.

Is a transfer to the family more favourable for tax purposes than a sale?

Often yes, because no inheritance or gift tax applies and the book values are continued. Whether it is really more favourable in the individual case depends on real estate, legal form and the distinction between paid and unpaid. This question should be clarified early with a tax advisor.

When should I clarify the tax question in succession?

As early as possible, at the latest before the purchase price is discussed. Periods such as the seven years for half-rate taxation or the age limit of 55 for the real estate transfer tax allowance can no longer be met afterwards.