Jermaine Jackson was directing the concert, which was supposed to see artists from around the world performing the late popstar's hits. However, the show was later cancelled because of a shortage of time to secure top name artists.
"[The show would have been] very interesting... had it been properly prepared and organised but it was not," said Mayor Michael Haupl.
Vienna authorities originally said that they would subsidise the costs of the concert, but pulled their financial support when the expected "top stars" did not join the bill.
Chris Brown, R Kelly, Stevie Wonder, Mary J. Blige and Natalie Cole were rumoured to performing.
The gig was scheduled to take place at the Schoenbrunn Palace on September 26. It is now expected to take place in London next June.