$80 Billion Locked in a Golden Cage in Austria May Be Freed

Austria allowed families a tax-friendly way to transfer wealth and keep things together in 1993 to keep capital within the country. Toda, however, the trusts have outlived their usefulness, and are perceived as preventing the efficient use of capital.

Many people within the administration of these trusts as well as the beneficiaries and trustees are calling for lawmakers to revise them, a move that could spur mergers, acquisitions, share sales, breakups and takeovers. “The family is no longer in control, managers are not empowered to make bold moves, and decision-makers at the trust are too far away from the business. If trust laws were more flexible, these companies could break free and equity capital might become available for new ventures,” said Klaus Vukovich, a banker at boutique investment bank Alantra in Vienna.

Options being studied include lowering the costs of dissolving trusts, allowing some family members to exit, redefining liability laws for trustees so they can take riskier decisions and giving founders greater control.

Trusts have served as useful vehicles for stalwarts of Austrian and German industry, among them some household names: Porsche-Piech family that controls Volkswagen AG, the Leitner family that built up Andritz AG, gunmaker Gaston Glock and developer Rene Benko.

See Matthais Wabl, $80 Billion Locked in a Golden Cage in Austria May Be Freed, Bloomberg, December 1, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.