Posted: 05 May 2022 5 min. read

Fees and Duties Act: Surety or promise of success in contract?

Facts of the Case

One section of a hotel lease agreement stated that the guarantor was fully liable and therefore guaranteed compliance with all the lessee's obligations under the The Austrian tax authorities imposed a fee pursuant, since in its opinion the guarantee was a surety (“Bürgschaft”). The lessor (= Applicant) appealed and argued that the contractual obligation was a promise of success (at no charge according to the GebG), thus the imposition of the fee is not permissible. The classification of the provision as a surety (subject to a fee) or as promise of success (not subject to a fee) was in dispute.

Tax Authorities: “Surety exists due to accessoriness”

The tax authorities believed the true economic content of the agreement was for the guarantor to be fully liable for compliance with all obligations of the lessee under the agreement. However, no further liability apart from payment of the rent was inferred by the provision, especially not for a certain success or for anything completely unrelated to the lease agreement in question. A guarantor (surety) promises to perform what the principal debtor would have to perform. Thus, the agreement fulfills the requirement of mandatory accessoriness to the main performance (strict dependence on the main performance). Therefore, a surety was assumed.

Tax Appeals Court: “Wording concludes performance guarantee”

Based on the overall picture of the hotel lease agreement, the Tax Appeals Court  concluded that the guarantor is not only liable for the monthly payment of the rent by the lessee, but also for the compliance with all obligations of the lessee under the agreement, ie the compliance with the operating obligation, the obtaining of all permits required for the hotel operation, etc. The wording in the agreement essentially guaranteed the successful operation of the hotel by the lessee for the duration of the lease agreement. For these reasons no surety subject to a fee within the meaning of Section 33 tariff line 7 Austrian Fees and Duties Act  exists, but rather a guarantee for success according to Section 880 a ( 2) Austrian Civil Code.

Conclusion

Success guarantees and sureties belong to the subcategory of the guarantee contract. The Feder Fiscal Court concludes that Section 33 fee item 7 Austrian Fees and Duties Act does not cover the non-regulated guarantee contract, nor the guarantee of success pursuant to Section 880a (2) of the Austrian Civil Code, but only surety within the meaning of Sections 1346 et seq of the Austrian Civil Code.

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Michaela Morgenbesser, BSc (WU)

Michaela Morgenbesser, BSc (WU)

Assistant Steuerberatung | Deloitte Österreich

Michaela Morgenbesser ist in der Steuerberatung bei Deloitte Wien beschäftigt. Ihre Tätigkeitsschwerpunkte liegen im Bereich der Unternehmenssteuern, insbesondere Gruppenbesteuerung und Bilanzsteuerrecht.

Mag. Petra Mayer

Mag. Petra Mayer

Senior Manager Steuerberatung

Mag. Petra Mayer ist Senior Manager bei Deloitte in Wien. Ihre Tätigkeitsschwerpunkte liegen in der laufenden steuerlichen Beratung national und international tätiger Unternehmen in den Bereichen Steuerplanung im Konzern, Gruppenbesteuerung, Umsatzsteuer und Bilanzsteuerrecht sowie in der Beratung von Kunst- und Kulturinstitutionen.