ECJ: No (Portuguese) real estate transfer tax on contribution of shares in a property-holding corporation

In its judgment dated 4 June 2026 (C-837/24) in the case “Nova Iberomoldes”, the ECJ ruled as follows: The collection of Portuguese real estate transfer tax on a non-cash contribution of 75% of the shares in a company holding Portuguese real estate violates the Directive on the raising of capital (Directive 2008/7/EC of the European Council dated 12 February 2008 concerning indirect taxes on the raising of capital).

Underlying case

The Portuguese stock company Nova Iberomoldes was founded in 2019. The share capital was contributed as non-cash contributions of participations. The assets of one of these participations, which was structured as a corporation (comparable to a limited liability company), included two properties located in Portugal. According to the Portuguese tax authority, this transaction was subject to the IMT (municipal tax on transfers of immovable property for consideration, similar to the Austrian real estate transfer tax). According to the IMT Code, the term “transfer of immovable property” also includes the acquisition of interests or shares in certain companies, where those companies are the owners of immovable property and where, by that acquisition, any shareholder comes to hold at least 75% of the share capital.

Ultimately, the case was referred by the Portuguese Tax Arbitration Tribunal to the ECJ for a preliminary ruling.

ECJ decision

The ECJ ruled for the following reasons that the Portuguese real estate transfer tax on contributions of shares in property-holding corporations is not compatible with the Directive concerning indirect taxes on the raising of capital (hereinafter “the Directive”):

• The disputed contribution constitutes a restructuring within the meaning of Article 4 of the Directive, since it resulted in the acquisition of the majority of voting rights in another corporation and was compensated by the granting of consideration shares. According to Article 5 of the Directive, Member States are generally prohibited from levying indirect taxes on such restructurings. The ECJ determined that the Portuguese IMT constitutes such an indirect tax.
• Article 6 of the Directive provides exceptions to the prohibition on levying indirect taxes on restructurings. However, none of these exceptions, particularly the exception related to the so-called transfer duties, applies in this case, since the contribution does not result in a change of ownership of the property itself and was not compensated by anything other than consideration shares.
• Finally, the ECJ rejected that the collection of the Portuguese real estate transfer tax could be justified by the aim of preventing tax fraud and tax evasion.

Impact on Austrian real estate transfer tax

It can be assumed that the present ECJ ruling will have material consequences for the restructuring of shares in property-holding corporations in Austria, as the legal situation in Portugal is comparable to that in Austria. In particular, the obligation to pay Austrian real estate transfer tax appears doubtful, for example, in the following restructurings:

• Down-stream and side-stream contributions of shares in other corporations.
• Down-stream and side-stream demergers of shares.

Based on the provisions of the Directive, this should apply regardless of whether these transactions are carried out with or without an increase in capital and whether they involve direct or indirect restructuring (e.g., grandmother grants).

In conclusion

We recommend reviewing open cases or unrealised transactions related to the restructuring of property-holding corporations for their comparability to and applicability of this ECJ ruling. If applicable, instead of a self-assessment of the real estate transfer tax, a tax return pursuant to section 10 GrEStG (Austrian Real Estate Transfer Tax Law) should be submitted to the tax office to preserve the option of legal remedies.

For already self-assessed cases, an assessment notice can be requested within a period of one year after self-assessment, and subsequently an appeal against the assessed real estate transfer tax can be filed.

Our experts are happy to advice you on this matter.