A €249,000 penthouse in Timmendorfer Strand and a €249,000 apartment above Tegernsee cost, on paper, exactly the same. Buy them outright and the tax office disagrees: the Baltic penthouse, in Schleswig-Holstein, carries a 6.5 per cent real-estate transfer tax, while the Bavarian apartment carries 3.5 per cent — a €7,500 gap on an identical headline price, decided entirely by which side of a German state border the front door sits on. That single divergence is a useful way into a subject most foreign buyers reach only after they have signed: how Germany and Austria — the two markets into which co-ownership has expanded most quickly in the past year — actually tax the people who own second homes there.
The German-speaking countries are, in the second-home imagination, associated with order and predictability, and their property-tax systems mostly deliver it. But 2025 brought two genuine changes — a long-delayed overhaul of Germany''s annual property tax and a targeted Austrian reform of how transfers of property-holding companies are taxed — and the second of those lands unusually close to the way co-ownership is structured. What follows is a country-by-country map of the four taxes that matter to a foreign co-owner: the one-time tax on buying, the annual tax on holding, the tax on selling, and the tax on passing a share to the next generation. As with every jurisdiction we cover, the through-line is that a co-ownership share is bought and held inside a properly structured company, which changes where some of these taxes fall — and, in one case this year, changes it materially.
Germany: The One-Time Cost of Buying
Germany levies a one-time real-estate transfer tax — Grunderwerbsteuer — on the purchase of property, and unusually among European countries it lets each of the sixteen federal states set its own rate. The result is the spread the two penthouses illustrate: 3.5 per cent in Bavaria and Saxony at the low end, rising to 6.5 per cent in Schleswig-Holstein, North Rhine-Westphalia, Brandenburg and Saarland. The tax is due on any purchase above a nominal €2,500 threshold and is, in practice, always paid by the buyer. On the Baltic coast — where much of COP''s new German inventory sits, from Timmendorfer Strand across to Rügen and Usedom — the 6.5 per cent Schleswig-Holstein and Mecklenburg rates apply; in the Alpine south, around Tegernsee, the Bavarian 3.5 per cent is among the lowest in the country.
For a co-owner, the important point is when this tax is paid, and by whom. Grunderwerbsteuer falls on the acquisition of the property itself — the moment the company that will hold the home buys it — not on the later sale of a share in that company to an individual co-owner. The transfer tax is therefore already priced into the structure by the time a share reaches the market, in the same way furnishing, legal set-up and operating reserves are. A buyer of a one-eighth stake is not writing a separate five-figure cheque to the German tax office on completion; they are buying into a home on which the entry taxes have already been settled. Notary and land-registry costs in Germany add roughly a further 1.5 to 2 per cent to a direct purchase, and these too sit inside the structure rather than on the individual owner''s desk.
Germany: Holding, Selling and Passing On
The annual tax on holding German property is also called Grundsteuer, and 2025 was the year it was rebuilt. Germany''s constitutional court had struck down the old system because it valued property on figures dating back to 1964 in the west and 1935 in the east; from 1 January 2025 a new, current-value assessment took effect nationwide. The reform was designed to be revenue-neutral overall — some owners now pay more, some less — and the sums involved remain modest by international standards, typically a few hundred euros a year on an apartment. For a co-owner the mechanism is the same as everywhere: the annual Grundsteuer is billed to the property, settled through the managed accounts, and appears to the individual only as one-eighth of a single transparent running-cost figure rather than as a German-language demand landing each year.
On selling, Germany applies one of Europe''s more owner-friendly rules. Under the so-called speculation period (§23 EStG), any gain on a property held for more than ten years is entirely free of tax. Sell within ten years and the gain is added to income and taxed at the personal rate — 14 to 45 per cent, plus the 5.5 per cent solidarity surcharge — a rule that applies to non-residents on German-situated property just as it does to residents. The ten-year clock and the buy-and-hold logic of co-ownership point in the same direction: shares are bought to be used across years, not flipped, and a hold beyond the decade mark takes the German capital-gains question off the table altogether. It is worth adding a detail foreign buyers often miss to Germany''s credit — the country has levied no annual wealth tax since 1997, so unlike in Spain or France there is no net-worth charge on the value of the home to plan around.
Inheritance is where German property can bite, and where the numbers deserve attention before, not after. Germany taxes German-situated real estate on death regardless of where the deceased or the heir lived, at progressive rates running from 7 per cent to 50 per cent depending on the relationship and the sum. The allowances that soften this are generous within the family — €500,000 for a spouse, €400,000 per child, €200,000 per grandchild — but fall to just €20,000 for unrelated heirs, who face a starting rate of 30 per cent. Because a co-ownership share is company property rather than a directly held plot, it is transferred and valued as a corporate interest, which tends to make succession cleaner than an outright cross-border conveyance — but the underlying German tax exposure on the value of the share is real, and is exactly the kind of point our buying FAQs flag for advice against a buyer''s own national estate position.
Austria: The July 2025 Share-Deal Reform That Matters Most to Co-Owners
Austria''s headline purchase tax looks simpler than Germany''s: a single national Grunderwerbsteuer of 3.5 per cent on the transfer of property, with a reduced 0.5 per cent rate preserved for transfers within close family. What changed on 1 July 2025 is not that rate but the treatment of share deals — the purchase of shares in a company that owns real estate rather than the bricks directly — and because co-ownership is a share structure, this is the one 2025 change every prospective Austrian co-owner should understand.
The reform, in force since the middle of last year, lowered the ownership threshold that triggers transfer tax on a property-holding company from 95 per cent to 75 per cent, extended the tracking window for changes in ownership from five years to seven, and raised the effective rate on qualifying share transfers to the full 3.5 per cent of the property''s fair market value — up from the 0.5 per cent that clever structures had previously exploited. Its target is explicit: large investors who bought entire buildings through corporate wrappers to avoid the ordinary transfer tax. The crucial detail for a co-ownership buyer is the 75 per cent threshold. A single owner acquiring a one-eighth share — 12.5 per cent — of the company that holds an Alpine chalet comes nowhere near consolidating the 75 per cent that the anti-avoidance rule is written to catch. The reform, in other words, tightens the screws on the buyer trying to swallow a whole property tax-efficiently, while leaving the individual co-owner — the person buying a fraction alongside seven unrelated others — outside its reach.
That does not mean no transfer tax is paid on an Austrian co-ownership home — it means the tax is paid the ordinary way. When the holding company first acquires the property, the standard 3.5 per cent asset-deal Grunderwerbsteuer applies and is built into the structure, just as in Germany. A co-owner buying a share in a chalet at See by Ischgl or elsewhere across the Austrian collection inherits a property on which entry tax has already been settled, and the July 2025 reform — despite the alarm it caused in the M&A world — adds nothing to their bill.
Austria: The Gentlest Holding Costs in Europe, and a Flat Tax on Selling
Austria''s annual property tax is, for a foreign buyer used to Anglo-Saxon council tax or French taxe foncière, almost startlingly light. The annual Grundsteuer is assessed not against market value but against the Einheitswert, a ratable value still calculated from 1973 reference figures and therefore far below what a property is actually worth. In practice a typical apartment owner pays somewhere between €100 and €400 a year, and a house owner rarely more than four figures — a rounding error against the value of an Alpine second home, and, crucially for the country''s appeal, Austria levies no annual wealth tax on top of it.
The tax on selling is where Austria is stricter than Germany, and where the difference in national philosophy shows. There is no ten-year escape hatch: the Immobilienertragsteuer (ImmoESt), introduced in 2012, applies a flat 30 per cent to the gain on almost any sale of Austrian property, whenever it occurs. The principal exemptions are residence-based — broadly, a main home lived in for at least two continuous years before sale, or for five of the previous ten — and so are largely unavailable to a foreign second-home owner, for whom the 30 per cent should simply be assumed on any future gain. Set against the near-zero annual holding cost, the shape of the Austrian bargain becomes clear: you pay almost nothing to hold and a defined 30 per cent to sell at a profit, which rewards the long, use-focused ownership horizon a co-ownership share is built for rather than short-term trading. For the fuller mechanics of how gains, dues and taxes are billed through the structure rather than chased across borders, our Italian tax guide walks through the same logic in a neighbouring jurisdiction.
What It Means for a One-Eighth Share
Read together, the German and Austrian systems tell a consistent story for the co-owner. The one-time purchase taxes — 3.5 to 6.5 per cent in Germany, a flat 3.5 per cent in Austria — are real but are settled at the level of the property and absorbed into the structure, so they do not surface as a separate demand on the individual buyer. The annual holding taxes are modest in Germany and close to trivial in Austria, and in both cases reach the owner only as one-eighth of a single managed running-cost line. The taxes on selling differ in shape — Germany''s ten-year exemption versus Austria''s flat 30 per cent — but both reward the patient, high-utilisation ownership that fractional structures are designed around. And the 2025 reforms, so significant in the professional press, either leave the co-owner untouched (Austria''s share-deal rule, aimed at the 75 per cent buyer) or reach them only as a slightly recalibrated annual bill (Germany''s Grundsteuer).
None of this is tax advice, and the one number that always matters most — the interaction with a buyer''s own country of residence, from the UK''s remittance rules to a home-state credit for foreign tax paid — can only be answered case by case. What the co-ownership structure does is remove the administrative weight of that analysis from the annual experience of ownership: the German and Austrian taxes are calculated, filed and paid inside the vehicle that holds the home, and the owner sees a clean account rather than a foreign tax calendar. To see the homes these rules apply to, browse the Austrian collection and the wider current inventory, or speak with our team to understand how a specific share is structured and taxed before you go any further.
