New Tax laws and draft bills before the parliament’s summer break

The draft bill regarding the EU Financial Adaptation Act was passed in the Austrian parliament before the summer break. Furthermore, several updated draft bills regarding the Austrian Tax Reform 2020 (including introduction of ATAD II, introduction of a digital tax etc – see in detail our Tax News 04-05/2019) were issued in the parliament in order to enable a potential vote in the September sessions of the Austrian parliament.

Markus Vaishor

Financial Criminal Act: Introduction of new offence of cross-border VAT fraud and increase of penalties for offences concerning taxes and customs duties

The Tax News 04-05/2019 already presented the changes of the Financial Criminal Act intended by the Austrian legislator (draft Act on Combating Tax Fraud). The so-called EU Financial Adaptation Act 2019 has now introduced the new offence of "cross-border VAT fraud" and increased the penalties for existing offences.

Stefan Papst

Additional amendments, specifications and clarifications to the Ultimate Beneficial Owner Registry Law

A law, which was passed by the Austrian parliament on July 3, 2019, implements the 5th AML-Directive (EU) 2018/843 in Austria by amending the local Ultimate Beneficial Owner Registry Law.

The Austrian legislation newly adds the obligation to submit reasons for any (subsidiary) registration of senior managing officials of an entity once a year, the limitation of liability towards third parties and a new electronic process for the exchange of professional representatives, enhanced reporting obligations for professional (legal and tax) counsels on behalf of their clients and a further increase of elements and facts constituting criminal/administrative financial offences.

Moreover, new provisions have been added facilitating the use of the newly introduced data platform linked to the Austrian UBO-Registry, where all data and documentation relevant for determining and verifying ultimate beneficial ownership (the so called “Compliance-Package”) shall be uploaded by professional counsels and stored on behalf of their clients on a voluntary basis. Newly established reliefs refer to the upload of notes (instead of full documents), to the confirmation by the reporting entity and to the “reuse” of an already stored “Compliance Package” of a superior entity by a reporting Austrian subsidiary.

Stefan Haslinger / Christiane Edelhauser

Initiative proposal Tax Amendment Act 2020: Amendments Austrian VAT Act 

Compared to the ministerial draft on the implementation of the measures from the EU e-commerce package, the initiative proposal contains changes to the VAT law on declaration obligations and an extension of the deadline for the margin taxation of travel services in the B2B sector. In addition, the "support" through an electronic interface is specified in the explanations.

Esther Freitag / Draga Turic

Austrian Administrative Supreme Court on the requirements for the WHT exemption on dividends according to the EU-parent-subsidiary directive

According to Austrian Corporate Income Tax Law dividends paid to corporate recipients (e.g. corporations) are subject to 25 % WHT. According to the Austrian implementation of the EU parent-subsidiary directive, dividends are exempt from WHT if:

• the parent company is in principle comparable to an Austrian corporation, i.e. named in the EU parent subsidiary,
• holds a minimum participation of 10 % (directly or indirectly)
• for an uninterrupted period of at least 1 year
• the parent company has substance, i.e. disposes of business premises, employees and active business

If the above criteria is met, WHT is reduced to 0 % at source or could be refunded.

However, the Austrian Administrative Supreme Court recently decided several cases on substance requirements in terms of dividend withholding tax on dividends paid to EU-holding companies. In particular in terms of the “active business” requirement, a grey area remains that needs to be evaluated on a case by case basis. The Austrian Administrative Supreme Court, however, confirmed that there is not withholding tax relief at source if there is no reasonable business activity at all. In another case where a Lux Holding Sarl (with only a shareholding in an Austrian company) owned by a Lux Master Sarl, the Austrian Administrative Supreme Court came to the conclusion that withholding tax relief at source does apply in this particular case apparently because the Lux Master Sarl acted as a platform for pan-European investments and had at least three employees.

Nevertheless, as stated above a grey area remains also considering recent CJEU decisions that are stricter in terms of the substance requirements. It should also be considered that Austria recently adopted the broader abuse definition of ATAD I.

Markus Vaishor / Katrin Postlmayr

Austrian Ministry of Finance publishes discussion draft on Austrian Corporate Income Tax Guidelines

The Austrian Ministry of Finance recently published a discussion draft on the Austrian Corporate Income  Tax Guidelines which in particular deals with the new ordinance on the Austrian CFC taxation.

Markus Vaishor

No full input tax deduction for mixed inputs despite the absence of national rules

The CJEU decided on May 8^th, 2019, C-566/17, Związek Gmin Zagłębia Miedziowego, that the absence of national rules on the deduction of input tax in connection with both economic and non-economic activities must not result in the complete deduction of that mixed inputs.

Esther Freitag / Alfred Mühlberger

CJEU: VAT Exemption for export supplies applicable without customs export procedure

In its judgment of 28 March 2019, Vinš (C-275/18), the CJEU ruled that the application of the VAT exemption for export supplies according to Art 146 para 1 lit a EU VAT Directive cannot be made conditional on the goods having been placed under the customs export procedure.

Esther Freitag / Draga Turic

Tax-free intra-Community supply with chain transactions

The Austrian Administrative Court (VwGH) decided on April 3^rd, 2019 (Ra 2018/15/0125) that the party for whom the transport agent acts is relevant for the assessment of whether the transfer of loading numbers has already resulted in a transfer of the right to dispose of the goods to the end consumer as an owner or whether this right remains with the seller of the goods.

Esther Freitag / Alfred Mühlberger

German Federal Fiscal Court (BFH): Place where business is established 

In its judgment of 7 February 2019, V B 68/18, the German Federal Fiscal Court (BFH) stated that the question of the requirements for an invoice entitling the deduction of input tax with regard to the indication of the full address of the service provider has no significance for the question of from where a taxable person conducts his business.

Esther Freitag / Draga Turic

Does a home office constitute a permanent establishment? 

Via its Express-Answering-Service (EAS), the Austrian Ministry of Finance (BMF) has repeatedly expressed its opinion on whether or not respectively under which circumstances the “home office” of an (Austrian) employee might constitute a fixed PE for its foreign employer. In this context, the BMF once again confirmed its previously developed criteria. In certain sub-sections the BMF even presents a more detailed view.

Florian Rosenberger / Thomas Hahn

Protocol on double taxation treaty Austria-Russia enters into force as from June, 20 2019

The Austrian parliament approved the protocol on the changes of the double taxation treaty Austria-Russia on June, 12 2019. The revised treaty enters into force as from June, 20 2019 and will be applicable on tax periods beginning on or after January, 1 2020. Apparently, the treaty will not be applicable vis-à-vis Crimea.

Markus Vaishor / Florian Popl

Basis for the calculation of the real estate value of building rights according to Art 2 of the ordinance on the calculation of the real estate value

According to the ordinance on the calculation of the real estate value, the real estate value may be calculated as a lump-sum. The real estate value is usually lower than the fair market value and may constitute the tax basis for the real estate transfer tax in certain cases (e.g. transfer of real property in the course of a company reorganization covered by the Austrian Reorganization Tax Act).  A special case in Austrian law are so-called building rights (Baurecht), i.e. the right to own a building on land owned by a third party whereby such right is registered in the cadaster. It is questionable if (part of the land value) is also part of the real estate value. Previously, the Ministry of Finance published an information on how to calculate the real estate value for building rights. However, recent jurisdiction by the Austrian Administrative Supreme Court obviously contradicts the Ministry’s opinion. 

Markus Vaishor / Florian Popl

Austrian Federal Finance Court on the capital gains from the sale of real property in relation to diplomats resident in Austria 

Capital gains from the sale of real property derived by individuals as from April 1, 2012 are subject to tax with a flat tax rate of 25 % (April 1, 2012 – December 31, 2015) or 30 % (Jan 1, 2016 – present). However, there are two important tax exemptions. An exemption applies, if the property had been the seller‘s principal home two years from the acquisition/construction and prior to the sale or for at least five years during the last 10 years. In addition, the seller´s principal home has to be abandoned (applies for both cases). The Austrian Federal Finance Court recently decided, that the before mentioned exemption does not apply, if the seller is treated as a limited tax payer in Austria. In the respective case, an executive employee of the OPEC fund, a Nigerian citizen, had its principal home during his Austrian engagement in Austria. Due to special provisions applicable for diplomats and executive employees of international organizations they are treated as limited tax payers in Austria even though they are resident in Austria or have at least their habitual abode in Austria. Thus, the respective exemption on capital gains from the sale of real property is not applicable, as only unlimited tax payers are able to constitute their residence or habitual abode in Austria. 

Markus Vaishor / Katrin Postlmayr

Austrian Administrative Supreme Court on the capital gains from the sale of real property: pre-contracts are not relevant

Capital gains from the sale of real property derived by individuals as from April 1, 2012 are subject to tax with a flat tax rate of 25 % (April 1, 2012 – December 31, 2015) or 30 % (Jan 1, 2016 – present). The Austrian Administrative Supreme Court recently decided in a case, in which a pre-contract (“Vorvertrag”) over the future sale of Austrian real property was concluded before April 1, 2012. A pre-contract only includes the obligation to conclude a binding agreement at a later stage. However, the sales agreement was concluded after the before mentioned date. The court decided that pre-contracts are not relevant in terms of determining a taxable sale of real property. The signing of the binding sales agreement as a contractual agreement is the relevant point of time. Thus, the sale of real property was subject to tax as the sales agreement was concluded after April 1, 2012 in the case at hand. 

Markus Vaishor / Katrin Postlmayr

Austrian Supreme Administrative Court on voluntary self-disclosure: Scope of the “last-minute” surcharge

Anyone who makes a voluntary self-disclosure after notification of a tax audit has to pay a "last-minute" surcharge of up to 30% in addition to the tax payment in order to obtain impunity. According to the case law of the Austrian Supreme Administrative Court, in principle, all disclosed facts that are at risk of being discovered during a tax audit are subject to the surcharge. Therefore, when levying the surcharge, the tax authority is not restricted to the content of its announcement of the tax audit. Whether there is a connection between the announcement of the tax audit and the content of the self-disclosure in the sense of a risk of discovery is a matter for the free assessment of evidence.

Stefan Papst / Maximillian Ringhofer

Notes on the second settlement of the Austrian Employment Bonus

Companies that concluded a subsidy agreement (“Förderungsvertrag”) for the Employment Bonus can make a settlement with the Austria Wirtschaftsservice Gesellschaft mbH (aws) annually within a period of 3 months after the settlement due date. This settlement has to be made exclusively online via the “aws Fördermanager” (stating an abundance of data and to some extent also attachments). Regarding additional information concerning the headcount, a confirmation by a tax advisor / public accountant is required.

Tatjana Schrefl

Direct debit procedure (SEPA) for tax-payments

The Austrian Ministry of Finance has set out rules and conditions for tax payments using the direct debit-procedure. SEPA is in particular applicable for advance income tax payments.

Bettina Matzka