Since November 11, 2017, newly concluded tenancy agreements for residential premises have been free of charge. This one-year anniversary is taken as an opportunity to address the question raised in the title. The following explanations are therefore mainly of interest for rental agreements for commercial purposes.

It is undisputed that 1% of the sum of three times the annual gross rent is payable in fees for open-ended rental agreements for commercial purposes. In the case of open-ended rental agreements, the calculation basis is therefore “capped” with a maximum assumed duration of 3 years. In the case of fixed-term rental agreements, the annual value of the recurring payment is multiplied by the number of years, i.e. the fixed-term period. In this case, the number of years is capped at 18. If a rental agreement is therefore limited to 18 years or longer, a duration of 18 years is assumed and the annual rent is multiplied by this figure to calculate the assessment basis. This is standardized in § 33 TP 5 of the Fees Act 1957.

In this context, the VwGH was asked whether an agreement on all grounds for termination under Section 30 (2) MRG with a simultaneous waiver of termination by the landlord for a certain period of time cancels out this waiver of termination in such a way that an indefinite tenancy is to be assumed under fee law.

In the underlying case, a rental agreement was concluded for the construction and subsequent operation of a hotel. According to the lease agreement, this was expressly concluded for an “unlimited term”. Both the landlord and the tenant waived their right to terminate the lease for a period of 25 years. At the same time, a number of reasons were agreed which entitle the landlord to terminate the lease (including extraordinary termination). For example, the grounds of Section 30 (2) MRG were also agreed as entitling the landlord to terminate the lease. In this context, the question then arose as to whether the basis for calculating the fees should be assumed to be an open-ended contract and the basis for calculating the fees should be “capped” at three times the annual rent, or whether the contractual relationship is limited to 25 years. In the latter case, the basis of assessment would be 18 times the annual rent.

This was initially followed by a decision of the Federal Fiscal Court with reference to the previous case law of the Administrative Court:

“Nccording to the established case law of the Administrative Court, the distinguishing feature between lease contracts concluded for a definite and indefinite period is whether or not both parties to the contract are to be bound by the contract for a definite period of time according to the declared contractual intention, whereby the possibility of unilaterally terminating the contract prematurely for individual specified reasons does not, however, stand in the way of assessing the contract as one concluded for a definite period of time according to the last sentence of § 33 TP 5 para. 3 GebG.

What constitutes a restriction of the possibility of termination to individual cases expressly specified in the contract is a question that must be answered differently from case to case according to the weight and probability of realization of the contractually agreed grounds for termination […]. According to the case law of the Administrative Court, the agreement of all grounds for termination pursuant to § 30 para. 2 MRG does not constitute a sufficient restriction of the termination options, so that in such a case a contract for an indefinite period of time is to be assumed […]. “. – VwGH 19.09.2017, Ra 2017/16/0111

In this context, the BFG also states in its decision that in order to assess whether a tenancy agreement is limited or unlimited in terms of fees, it must first be clarified whether only individual, specific grounds for termination by the landlord have been agreed or all grounds for termination under Section 30 (2) MRG or equivalent grounds for termination. As a result, the court denied that all grounds for termination under Section 30 (2) MRG had been agreed in the case in question, even if this is not entirely comprehensible. In the proceedings, the BFG therefore carried out an examination of the individual grounds for termination according to their probability and came to the conclusion that not all of the agreed grounds were relevant to the present contract. Among other things, this examination led to an appeal being lodged with the VwGH. According to the established case law of the Supreme Court, an examination is only to be carried out if individual grounds for termination have been agreed.

The appellant also argued before the VwGH that, according to prevailing case law, the agreement of all grounds for termination under Section 30 (2) MRG “does not constitute a sufficient restriction of the grounds for termination” in order to assume a tenancy for a definite term. The VwGH did not consider the legal question raised in this context. In its opinion, the appeal lodged here must be dismissed:

“The interpretation of the rental agreement reached by the Administrative Court in the appeal case as a contract concluded for a fixed term for the time being, which can only be terminated during this term for special, weighty reasons, does not reveal any errors of interpretation or other misjudgement that would raise a legal issue of fundamental importance.” – VwGH 19.09.2017, Ra 2017/16/0111

The result of this is that there is still no real clarification of the question of when a fixed-term and when an open-ended tenancy is to be assumed if a plethora of grounds for termination have been agreed in the tenancy agreement for the landlord. The fact that such a lack of clarity can lead to considerable problems is shown by the fact that in one case a “cap” of 3 times the annual rent and in another case 18 times the annual rent must be assumed. This should always be taken into account when drawing up rental agreements. This represents a considerable risk, especially for lawyers, notaries, real estate trustees, real estate managers and real estate agents, who are entitled to calculate the fee themselves in accordance with § 33 TP 5 Para. 5 Z 4 GebG. It should be mentioned that the current approach of the Tax Office for Fees, Transfer Taxes and Gambling and that of the Federal Fiscal Court is contrary to the case law of the Administrative Court. This is because they also carry out an examination – of the weight and probability of the individual grounds – when all grounds for termination under Section 30 (2) MRG are agreed. In the opinion of the VwGH, however, such an examination is only to be carried out if individual grounds for termination are agreed.

_{Sources:
BFG 4.4.2017, RV/1100501/2016
VwGH 19.09.2017, Ra 2017/16/0111
immolex 2018, 213}