In Austria, sole proprietorships, partnerships and corporations that are required to keep accounts are subject to the provisions of the Austrian Commercial Code (UGB). The rules for the valuation of current and non-current assets therefore apply to the accounting of real estate.

According to the Austrian Commercial Code (UGB), §198 (2), fixed assets are those items that are intended to serve the business operation permanently. In contrast, current assets are those items that do not serve the business operation permanently (§198 (4) UGB). Specifically for real estate, this means that if the property is used for business purposes (e.g. own use of office buildings, commercial premises, warehouses) or is rented out, it is considered fixed assets. If, on the other hand, the property is intended for short-term sale, it falls under current assets.

Whether circulating or fixed assets are present is crucial for the application of the correct valuation regulations:

• For real estate classified as fixed assets, the provisions of §§ 203 and 204 of the UGB (Austrian Commercial Code) apply for valuation purposes. Accordingly, fixed assets are to be valued at their acquisition or production costs, less scheduled depreciation. This means that the acquisition or production costs are to be allocated to the business years in which the asset can be economically utilized.

• For real estate classified as current assets, the provisions of §§ 206 and 207 of the UGB (Austrian Commercial Code) apply for valuation purposes. Accordingly, current assets are to be valued at their acquisition or production costs, less depreciation in accordance with § 207 UGB. This means that depreciation is to be recognized at the value resulting from a lower stock exchange price or market price as of the balance sheet date (strict lower-of-cost-or-market principle).