Country-specific differences in real estate: Your guide for Germany, Austria, and Switzerland
Are you planning to purchase property, conduct an appraisal, or manage an inheritance in a German-speaking foreign country? The differences specific to each country can be significant and present both opportunities and risks. This article highlights the key variations to ensure your cross-border real estate matters are successful.
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The topic briefly and concisely
Additional purchase costs for real estate vary significantly in the DACH region (DE: 9-15%, AT: ~10%, CH: up to 5%), particularly concerning land transfer tax and broker commission.
The EU Succession Regulation determines the applicable inheritance law based on habitual residence, but inheritance tax is not harmonised and varies significantly (e.g., none in AT, cantonal in CH).
Building regulations and energy standards (energy certificate) are strongly federal in Germany, Austria, and Switzerland, and despite EU-wide goals, they exhibit significant country-specific differences.
The acquisition, valuation, or inheritance of real estate across national borders, even within the culturally similar DACH region, is more complex than many assume. Have you ever wondered how much notary costs, real estate transfer taxes, or even building laws differ between Germany, Austria, and Switzerland? These country-specific differences can significantly impact your investment return, a property's value, or the structure of an estate. This article provides you with a detailed overview of the key differences in property valuation, ancillary purchase costs, inheritance law, and energy standards. This way, you'll be well-informed and able to make informed decisions.
Incidental purchase costs: A closer look at Germany, Austria, and Switzerland
Additional costs when purchasing real estate often pose a significant added financial burden. In Germany, you should anticipate around 9% to 15% of the purchase price going towards additional costs. The property transfer tax varies significantly between federal states, from 3.5% in Bavaria to 6.5% in Brandenburg or North Rhine-Westphalia. Notary and land registry costs amount to about 1.5% of the purchase price. Since the end of 2020, the seller and buyer share the broker's commission, which usually ranges from 5% to 7% (total), meaning the buyer often bears about 3.57%.
In Austria, you generally calculate with around 10% in additional costs. The property transfer tax is uniformly 3.5%. The land registration fee is 1.1% and the mortgage registration fee is 1.2% of the loan amount, although there are temporary exemptions for primary residences up to a purchase price of €500,000 until mid-2026. Notary or legal fees for drawing up the contract range between 2% and 3%. The broker's commission is a maximum of 3% (plus 20% VAT), making it 3.6% gross, and is often shared. An international land valuation is essential here.
Switzerland tends to have lower additional costs, often up to 5% of the purchase price. The property transfer tax (comparable to the property acquisition tax) is regulated at the cantonal level and typically amounts to 1-3%, with some cantons not charging it at all. Notary fees are often less than 0.5% and are frequently shared. A major advantage in Switzerland: The broker's commission is generally fully borne by the seller. These differences underscore how important precise calculation in advance is.
Property valuation in an international context: methods and standards
The valuation of real estate is also subject to country-specific differences, even as international standards gain in importance. In Austria, for example, real estate valuation was significantly influenced by the Real Estate Valuation Act of 1897 until 1992 when the Property Valuation Act (LBG) created a more modern framework. Common methods include the comparative value method, the income value method, and the intrinsic value method. International methods like the Anglo-Saxon 'Investment Method' or the 'Discounted Cash Flow Method' (DCF) are gaining influence, especially for yield properties. The Investment Method considers land and building as a unit, whereas the German income value method often separates them.
Organizations such as the International Valuation Standards Committee (IVSC) with the 'White Book' and The European Group of Valuers Associations (TEGoVA) with the 'Blue Book' aim for harmonization. The 'Market Value’ is a central, internationally recognized valuation term. The DCF method is especially suitable for investment decisions, as it provides a detailed representation of future cash flows, but poses challenges for long-term forecasts. For precise international land value calculation, these nuances are crucial. The complexity often requires consultancy, like the one offered by Auctoa with AI-based valuations and the ImmoGPT chat, to provide clarity.
The differences also appear in details: The German income value method often separates the returns from building and land, while the Investment Method treats them as a unit. Operating costs are analysed more in detail in the Anglo-Saxon area than often on a flat-rate basis in the German method. The risk of rental income shortfall is considered differently, sometimes in the interest rate (All Risks Yield), sometimes explicitly. These nuances greatly affect the determined value and underline the necessity of a knowledgeable, internationally savvy valuation.
Inheritance Law and Inheritance Tax: Cross-border Aspects for Property Owners
In cases of inheritance with an international element within the EU, the European Inheritance Regulation (EuErbVO) has been in effect since 2015. This regulation determines which national inheritance law applies—typically the law of the country where the deceased had their last usual residence. The option to choose the law is important: A German citizen can specify in their will that German inheritance law should apply, even if they reside abroad. This can have significant implications because, for example, the "Berliner Testament," which is popular in Germany, may be invalid in countries such as Spain (in general) or Italy.
Inheritance tax, however, is not harmonized throughout the EU. This can lead to tax liability in multiple countries. Germany taxes worldwide assets under unlimited tax liability (if the deceased or heir is a tax resident). Double taxation agreements (DTA) can help mitigate multiple burdens. Austria has not had inheritance and gift tax since 2008, but real estate transfer tax and notary fees apply. In Switzerland, inheritance tax is regulated by the canton; spouses and direct descendants are often exempt from tax. The international sales strategies should take this into account. The complexity of the issue makes early planning and advice essential. An Auctoa valuation can provide a solid basis for decision-making here.
Here are some country-specific aspects of inheritance tax for real estate:
Germany: Tax allowances vary greatly depending on the degree of relationship (e.g., €500,000 for spouses, €400,000 for children, €20,000 for siblings/nieces/nephews). A family home used by the owner can be inherited tax-free by spouses/children under certain conditions.
Austria: No inheritance tax since 2008. However, real estate transfer tax is due upon acquisition by reason of death (tiered rate, e.g., 0.5% for the first €250,000 for close relatives).
Switzerland: Varies by canton. Many cantons exempt spouses and direct descendants from inheritance tax. For other heirs, the rates and tax allowances can vary significantly. There is a DTA with Germany.
Spain: No DTA with Germany regarding inheritance tax. Spanish tax can potentially be credited against German tax. Tax allowances are often low (approximately €16,000).
Italy: No DTA with Germany. High tax allowances for close relatives (€1 million for children/spouses).
These differences clearly indicate how important careful estate planning is when dealing with international assets.
Legal Framework: Federalism Shapes the Regulations
Building law in Germany, Austria, and Switzerland is strongly shaped by federal principles. This means that the essential regulations are not enacted at federal level, but by the individual German federal states, Austrian states, and Swiss cantons. This results in a considerable variety of building codes and laws. In Germany, there are 16 state building codes. In Austria, the nine states have jurisdiction over construction laws and zoning laws. Switzerland has 26 cantonal building laws.
All share the goal of orderly urban development and safe building execution. However, differences appear in many details, such as:
Building setback regulations: The calculation and required size of setbacks to neighbouring properties vary.
Approval procedures: There are different regulations for projects that require approval, are subject to notification, or are exempt from approval. In Austria, for instance, a distinction is made between general building permission, simplified procedure, and building notice.
Energy requirements: Although there are EU-wide goals, the specific requirements for energy performance certificates and energy refurbishments can vary.
Specific local regulations: Rules regarding green roofs, bicycle parking, or monument protection requirements can differ significantly.
Notably, in Switzerland, the "Lex Koller" must be observed, which restricts the acquisition of properties by foreigners and may require cantonal approval. For EU citizens, purchasing property in Austria is generally possible, but there are also nine different real estate laws in the states that must be considered, especially for holiday homes. A thorough examination of local international standards and regulations is therefore essential. The complexity of these regulations underlines the value of sound advice, as offered by Auctoa.
Energy Standards and Energy Certificate: A Patchwork in Europe
Although the EU issues directives on the overall energy efficiency of buildings, the specific implementation and design of energy performance certificates and efficiency classes are the responsibility of individual countries. This leads to significant differences in comparability. For example, a building that would be classified in the lowest energy efficiency class H in Germany might still be considered class D in Flanders (Belgium) or the Netherlands, and thus initially not subject to renovation obligations. In Germany, the energy benchmark for class D is between 100-130 kWh/m²a, in Flanders it is 200-300 kWh/m²a, and in Holland 250-290 kWh/m²a.
The EU directive stipulates that by 2033 all residential buildings must achieve at least energy efficiency class D. According to IVD research, around 40% of all homes in Germany are affected by this. Additionally, by 2025, a renovation passport for existing buildings is to be introduced, with the aim of achieving zero-emission buildings by 2050. These differing energy requirements and evaluation scales directly impact property value and the need for investments. A precise analysis of international land prices must take this into account. The experts at Auctoa can help you accurately assess these complex energy aspects in your property evaluation.
The harmonization of energy performance certificates at the EU level is planned, but it is accompanied by many exemptions, which continue to complicate comparability. For owners and investors, this means that an energy certificate from one country cannot simply be equated with that of another country. This is especially important in cross-border investments and evaluations in order to avoid drawing incorrect conclusions about the energy condition and possible renovation obligations. The differences can quickly result in several tens of thousands of euros in unforeseen renovation costs.
Conclusion: Country-specific differences require careful planning and consultation
Investing in or dealing with real estate in the DACH region presents numerous challenges due to the diverse country-specific differences. Whether it's purchase-related costs, valuation approaches, inheritance laws, building regulations, or energy standards – the variations are significant and can have considerable financial and legal consequences. A blanket application of experiences from the domestic market to a neighbouring country is rarely effective. Understanding these differences is the first step towards successful real estate transactions and management across borders.
Thorough research and seeking expert advice are therefore essential. Use tools like Auctoa's ImmoGPT-Chat for initial information or contact us directly for a comprehensive, AI-supported evaluation and strategy consultation. This way, you can navigate the complexities of international real estate markets with confidence. Your well-informed preparation minimizes risks and maximizes your opportunities.
landerspezifische-unterschiede
Additional useful links
Statistisches Bundesamt provides comprehensive information on the construction price index and property price index in Germany.
Statista offers a study on property prices of all building years in Germany.
Statistisches Bundesamt supplies detailed tables on house prices and building land in Germany.
Statista presents a comprehensive dossier on the topic of property prices.
Wikipedia provides an overview of the property market.
Statistik Austria delivers official data on property prices in Austria.
FAQ
What is the rate of property transfer tax in Germany?
The land transfer tax in Germany varies depending on the federal state and ranges from 3.5% (e.g. Bavaria) to 6.5% (e.g. Brandenburg, North Rhine-Westphalia, Schleswig-Holstein) of the purchase price.
Do I have to pay inheritance tax on a property I inherited in Austria?
No, Austria abolished the inheritance and gift tax in 2008. However, there is a property transfer tax upon acquisition due to death, which is graduated (e.g., 0.5% on the first €250,000 for close relatives).
Who pays the broker commission in Switzerland?
In Switzerland, the seller usually pays the entire broker's commission (ordering principle). Typically, there are no brokerage fees for the buyer.
What is the EU Succession Regulation?
The EU Succession Regulation (EuErbVO) has governed since 2015 which national inheritance law applies to cross-border inheritance cases within the EU. Essentially, this is the law of the country of the deceased's last habitual residence, unless they have chosen the law of their nationality in their will.
What does 'Lex Koller' mean in Switzerland?
The 'Lex Koller' (Federal Act on the Acquisition of Real Estate by Persons Abroad) restricts the acquisition of Swiss real estate by persons or companies based abroad. For certain types of properties or uses, cantonal approval may be required.
Are property evaluation methods internationally standardized?
No, although there are harmonization efforts (e.g., by IVSC and TEGoVA) and internationally recognized terms such as 'Market Value', there are still country-specific differences in the valuation procedures and their detailed application, for example, between the German 'Ertragswertverfahren' and the Anglo-Saxon 'Investment Method'.
