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TAX & BUSINESS
Rental agreement between close relatives
Rentals within the family are only recognised for tax purposes under special conditions. In a recent decision the Federal Fiscal Court (BFG) clarifies which conditions must be met.
The BFG held, with reference to the consistent case law of the Administrative Court (VwGH), that agreements between close relatives are tax‑recognised only if the following conditions are met:
Agreements within the family must be drafted in a manner comparable to third‑party transactions in order to be tax‑recognised. Frequently the assessment of comparability is difficult. Therefore it is advisable to consult us already before concluding the relevant agreement, in order to minimise possible risks.
- The agreement must be sufficiently apparent outwardly,
- it must have an unambiguous, clear and doubt‑free content,
- it would have been concluded with third parties on the same terms.
- Furthermore, the actual performance of the contract must be in line with the aforementioned conditions.
Agreements within the family must be drafted in a manner comparable to third‑party transactions in order to be tax‑recognised. Frequently the assessment of comparability is difficult. Therefore it is advisable to consult us already before concluding the relevant agreement, in order to minimise possible risks.