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Scrapping stamp duty for loans

Wolfgang Freund

The Austrian stamp duty is a tax levied on various legal transactions concluded in written form. In general, the written instrument executed to document such transaction is the triggering event. The types of legal transactions which are subject to tax are enumerated in the Austrian Stamp Duty Act (Gebührengesetz, or the Act) and inter alia encompass loans, leases, guarantees, mortgages, bills of exchange, out of court settlements and assignment agreements for receivables or other rights against consideration.

It should be noted that the stamp duty will be triggered independently of the language of the document and whether or not the agreement is governed by Austrian law. Also, it is of relevance that not only a formal agreement, but also separate documents (for example offer and acceptance) and indeed any other written document, if it contains sufficient reference to (or contains all essentials of) the dutiable transaction triggers stamp duty.

This concept is often referred to as substitute deed. In fact, heads of agreements, protocols of hearings or pledge agreements relating to a transaction which would in the event of a written document be subject to stamp duties trigger as substitute deeds such duties notwithstanding that no written document has been executed.

For particular interest of the banking industry, loan and credit agreements are subject to stamp duties in the range of 0.8% to 1.5% of the amount of loan or credit. On this basis, a specific exemption exists for collateral agreements. Such agreements, although in principle, dutiable, do not trigger stamp duty, if serving as collateral to a dutiable loan or credit.

With its bill of November 30 2010 the Austrian Government proposed to abandon stamp duties on loan and credit agreements. The amendment to the Stamp Duty Act has come into force on January 1 2011 and no stamp duty will be triggered following December 31 2010. The exemption for collateral will nevertheless continue to exist. Such change will bring a lot of ease particularly to foreign banks operating into Austria.

Wolfgang Freund

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