ECJ: Why the ‘Nova Iberomoldes’ case is also putting pressure on the Austrian land transfer tax

In the Nova Iberomoldes case, the Court of Justice of the European Union recently handed down a judgment whose implications extend well beyond Portugal. This raises the question for Austria as well as to what extent the treatment of share mergers, changes in shareholders and restructuring under land transfer tax law is, in certain cases, consistent with EU law.

In its judgment of 4 June 2026 in the Nova Iberomoldes case, the ECJ ruled that a national tax on the acquisition of shares in property-owning companies may infringe the Capital Accumulation Directive 2008/7/EC if the share acquisition forms part of a capital injection or restructuring protected under EU law.¹

Although the decision directly concerns Portuguese law, it is also of considerable significance for Austria. This is because Section 1(3) of the Austrian Real Estate Transfer Tax Act (GrEStG) also covers not only direct transfers of land but also changes in shareholders, share consolidations and share acquisitions in companies owning land.²

1. The case in question and the ECJ judgment

The proceedings concerned the formation of the Portuguese company Nova Iberomoldes – SGPS, S.A., whose share capital was raised through contributions in kind. The contributions consisted of shareholdings in several limited companies, one of which held real estate assets.³

Under Portuguese law, the acquisition of shares in a property-owning company triggered land transfer tax if this resulted in a holding of at least 75 %. The Portuguese tax authorities therefore treated the transaction as an indirect transfer of property.

However, the ECJ classified the transaction as a restructuring within the meaning of Article 4(1)(b) of the Capital Accumulation Directive. Since Nova Iberomoldes acquired the majority shareholdings in return for the grant of its own corporate rights, the transaction fell within the scope of the Directive.⁴ Under Article 5(1) of the Directive, such transactions may not be subject to any indirect tax.⁵ In the Court’s view, the exceptions under Article 6 of the Directive did not apply. In particular, there was no valid property transfer tax because the immovable property was not transferred to Nova Iberomoldes either legally or in fact. Rather, the property remained the property of the company owning the land.

The ECJ also rejected any justification based on combating abuse. A blanket legal equivalence of certain share acquisitions with property transfers is not sufficient under EU law if no specific assessment of abuse is provided for.

2. Implications for Austria

The Austrian legal situation regarding land transfer tax shows clear parallels. Since the reform introduced by the 2025 Budget Accompanying Act, Section 1(3) of the Real Estate Transfer Tax Act (GrEStG) has covered, in particular, share consolidations and changes in shareholders in property-owning companies. A holding threshold of 75 % is generally decisive. Indirect share consolidations and groups of acquirers are also included.⁶

Against this background, the question therefore arises as to whether Section 1(3) of the GrEStG is compatible with EU law in those cases where the taxable transaction also constitutes a capital injection or restructuring within the meaning of the Capital Accumulation Directive. This applies in particular to contributions in kind, contributions of shares, mergers, demergers and comparable reorganisations of limited companies. This is because the Portuguese provision exhibits a discernible structural similarity to the Austrian share consolidation under Section 1(3) of the GrEStG – and this suggests that direct or indirect share consolidations may also give rise to concerns under EU law, insofar as they fall within the scope of the Capital Accumulation Directive as transactions protected by the Directive.

3. No general prohibition on the taxation of share deals

However, it does not follow from the judgment that the taxation of share deals is generally contrary to EU law. The decisive factor is whether the specific transaction falls within the material scope of the Capital Accumulation Directive.

A standard acquisition of shares for consideration in cash will not normally constitute a capital injection or restructuring within the meaning of the Directive. The situation is different for transactions in which shares or assets are contributed or transferred in exchange for the grant of corporate rights. It is only in these scenarios that the decision assumes its full relevance under EU law.

4. Conclusion

The Nova Iberomoldes judgment sets limits under EU law on the inclusion of share transactions for the purposes of land transfer tax. Although this does not generally call into question Section 1(3) of the Real Estate Transfer Tax Act (GrEStG), there are nevertheless considerable doubts as to the permissibility of imposing Austrian real estate transfer tax on capital injections and restructurings falling within the scope of Article 3 or Article 4 of the Capital Accumulation Directive.

There has been no reaction as yet from the Austrian tax authorities or the legislature. It remains to be seen whether and in what form the judgment will be reflected in administrative practice or legislation.