Tax News: English Summary 03/2020
English Summary 03/2020
English Summary of Newsletter
Austrian Ministry of Finance: Special rules regarding corona virus
The Austrian Ministry of Finance published an information according to which a tax payer may apply for a reduction of (corporate) income tax advance payments to zero or may also apply for a deferral of payment or payment in instalments for any tax provided that the tax payer credibly states that he has liquidity problems due to a SARS-CoV-2-infection or the government’s measures against a further spread of the virus. Furthermore, late payment interest may also be reduced to zero.
The corresponding information from the Austrian Ministry of Finance has recently been sent to various interest groups and is soon going to be published in the Ministry’s electronic database “Findok”.
According to the Ministry’s information, liquidity difficulties shall be mitigated by way of facilities for payment such as deferrals or reductions provided that the respective liquidity difficulties result from a SARS-CoV-2 virus infection or the federal state’s regulatory measures against the spread of the virus. In principle, these measures are based on provisions already provided for in Austrian tax law which tax payers in crisis frequently make use of. The Austrian Ministry of Finance is rather generous in terms of the proof that the respective liquidity issues result from SARS-CoV-2. In principle it is sufficient if the tax payer credibly states in his respective application that the liquidity problems are due to it. Your respective KPMG advisor will be delighted to assist you in preparing the relevant applications. All applications are to be dealt with immediately by the tax offices in accordance with the Ministry’s information. Sample applications and further information can also be found on the Ministry’s (German-language) website.
The Ministry’s information provides for the following measures:
1. Reduction / non-assessment of (corporate) income tax advance payments 2020
If a taxpayer can credibly state that he is affected by SARS-CoV-2 virus infections, advance payments for (corporate) income tax 2020 may be reduced even to zero as the case may be. This will be the relevant in industries in which a significant economic decline due to the current situation is expected. Applications can be submitted until October 31, 2020, however, we recommend to submit them before the second yearly instalment of the advance (corporate) income taxes becomes due (i.e. May 15). In case of a severe downturn of the business, it may even be advisable to make the application right away in order to receive a credit for the first instalment.
If the (corporate) income tax advance payment is not reduced to zero anyway, the advance payment is to be assessed with the amount of (corporate) income tax expected for the respective financial year. However, provided that the tax payer’s liquidity is severely affected by an emergency triggered by the SARS-CoV-2 virus in a way that he cannot pay the advance payment, he can request a partial or total non-assessment of the advance payments from his respective tax office.
Furthermore, the tax office has to refrain from assessing interest should an additional claim arise from the yearly assessment (due to a reduction or non-assessment of the advance payments).
2. Deferral of payment and payment instalments
The taxpayer can apply to his tax office for deferral of payment of a tax or to pay the tax in installments. Such applications lie in the discretion of the tax office which must, however, strongly consider the situation triggered by the SARS-CoV-2 virus. According to the wording of the published information this possibility is not restricted to specific taxes. Consequently, in our opinion applications for deferral or payment in instalments should be possible for all taxes, for instance also for advance VAT payments. Until an application for deferral is answered by the tax office, there is no payment obligation and no collection measures may be taken by the tax authorities.
If the taxpayer also applies for non-assessment of “deferral interest” at the same time as the application for deferral, the tax payment may not assess interest provided that the tax payer explains the specific impact of SARS-CoV-2-virus on his situation.
3. Reduction or non-setting of a penalty for late payments
If late payment interest is imposed, it may also be reduced or not assessed provided that the tax payer explains the specific impact of SARS-CoV-2-virus on his situation.
4. Tax Audits
Furthermore, based on an information circulated by the Chamber of Tax Advisors and Auditors, tax audits should also be suspended or interrupted. The tax auditors should be informed that the respective tax payer is affected by the effects of a SARS-CoV-2 virus infection in its operating activities (indication of the industry) and is therefore unable to provide the appropriate resources for the cooperation with the tax authorities as required by the law. If the emergency ceases to exist, the tax authority or the respective tax auditor should be informed immediately.
However, there is no mention of this in information published by the Ministry.
5. Further procedural options in the crisis
Currently, the Ministry of Finance has not yet announced any relief in the event of missed deadlines caused by a SARS-CoV-2 infection. In this regard, however, we would like to point out that in the event of imminent missed deadlines, an application for an extension of the deadline may be advisable. This applies, for example, to deadlines for filing tax returns or deadlines for appeals. We presume that the tax authorities will handle this rather liberally (as has been the case so far) in this special situation.
If a deadline is actually missed and the taxpayer suffers a legal disadvantage as a result, a request can be made to restore the previous status in accordance with Art 308 General Fiscal Code (“Wiedereinsetzung in den vorigen Stand”). If approved, the relevant application (eg an appeal) can be made with legal effect despite the missed deadline. The requirement for application of Art 308 General Fiscal Code is in particular a credible statement that the taxpayer was unable to meet the deadline due to an unforeseen or unavoidable event. According to the Austrian Administrative Supreme Court’s long-standing case law, in particular an illness that leads to an inability to act is deemed as a reason for a “Wiedereinsetzung”. We presume that the tax authorities and the Austrian Federal Finance Court will handle this rather liberally.
Furthermore, we assume that further relief measures will be taken by the Ministry of Finance. In particular it would be desirable to automatically delay all deadlines until the corona crisis is overcome.
Your KPMG consultant would be delighted to assist you with any applications.
We will keep you up to date with further developments regarding the Coronavirus. In the meantime, of course, your KPMG consultant will remain at your disposal for any questions.
Christoph Plott / Markus Vaishor
HR-related questions to and consequences of the spread of the Corona Virus
KPMG advises on the consequences of the spread of the Corona Virus in Labour Law, Social Security Law and Wage Tax Law.
Karin Bruchbacher / Katharina Daxkobler / Valerie Kalnein / Car-Georg Vogt / Elisabeth Wasinger
Austrian Administrative Supreme Court on the evidence for tax purposes of a write-down to fair value for investments
The Austrian Administrative Supreme Court recently confirmed that a valuation of a participation for the purposes of recognizing an impairment for tax purposes requires a detailed description of the calculation parameters in order that the impairment is tax-deductible. Expert opinions for GAAP-purposes sometimes do not fulfill all these criteria.
Markus Vaishor / Katrin Postlmayr
Austrian Ministry of Finance: Duly justification for late submission of EC sales lists
In its reply to the Austrian Chamber of Tax Consultants and Auditors, the Austrian Federal Ministry of Finance provided further guidance on the interpretation of the provisions of Art 7(1)(5) Austrian VAT Act as to when – in the case of a EC sales list is not submitted (within the deadline) – a duly justification to the satisfaction of the competent authorities can be assumed and the tax exemption for intra-Community supplies can be applied.
Esther Freitag / Draga Turic
German Federal Tax Court: Reference for a preliminary ruling to CJEU: Partnerships as VAT group members – restriction in line with VAT Law and reasonable?
With the request for a preliminary ruling of 21 November 2019, the FG Berlin-Brandenburg submitted to the CJEU for an assessment of whether the restriction of the "Organgesellschaft" to legal entities and partnerships in which, apart from the controlling company, only persons who are financially integrated into the controlling company (capitalistic partnerships) are involved is correct or justified. The CJEU decision will also be relevant for Austria, as this restriction has also been included in the Austrian VAT Guidelines issued by the Ministry of Finance.
Esther Freitag / Andreas Helnwein
Austrian Administrative Supreme Court: No tax exemption for export supplies in the case of participation in VAT evasion in a non-EU country
In its ruling of 18 December 2019, Ra 2019/15/0045, the Austrian Administrative Supreme Court dealt with the question of whether the VAT exemption for export supplies should be refused, if the supplier knew or should have known that the transaction in question was connected with tax evasion of the customer in the third country.
Esther Freitag / Draga Turic
Austrian Federal Finance Court: No exemption of import VAT where the subsequent intra-community supply is involved in tax evasion
The Austrian Federal Finance Court (Bundesfinanzgericht) decided on November 20th, 2019 (RV/6200003/2015) that the exemption of import VAT must be refused where the subsequent intra-community supply is involved in tax evasion.
Esther Freitag / Alfred Mühlberger
Austrian Federal Tax Court: Reference for a preliminary ruling to CJEU: Permanent establishment in the case of a leased immovable property
In its application for a preliminary ruling of 20 December 2019 (RE/7100002/2019), the Federal Tax Court asked the CJEU whether a permanent establishment always requires personnel and technical equipment.
Esther Freitag / Christina Pollak
Mandatory Data Transfer to the Social Security Institution in respect of profit distributions to shareholding managing directors of private limited companies
While information regarding the amount of profit distributions of shareholding managing directors – that are to be included in the contribution basis – were requested directly by the insured person concerned up to now, the mandatory and unsolicited transfer of this information by the tax authorities was now determined by regulation. For the first time, the information transfer has to be done regarding profit distributions made in the calendar year 2019. Those will be taken into account for contribution periods starting with Jan 2019.
Relevant case law in respect of overtime working hours
In recent case law, important aspects in respect of overtime working hours were dealt with.
In one case, the Federal Administrative Court (BVwG) had to assess the (in-)admissibility of a so-called “capping clause” in a works agreement regarding flexible working hours, essentially, due to the clause being too undifferentiated.
In another case, the correct calculation of compensation for unused holidays for seasonal business upon the end of the employment relationship was under review, under the scenario that during the seasonal employment relationship, overtime working hours were made regularly, but were not to be expected towards the end of the employment relationship due to the end of the business season. The Federal Administrative Court came to the conclusion that, under such a scenario, the overtime working hours made regularly during the season are not to be taken into account when calculating the compensation for unused holidays upon the end of the employment. However, this decision of the Federal Administrative Court was overruled by the Austrian Administrative Supreme Court (VwGH): Since the compensation for unused holidays upon the end of the employment relationship compensates for vacation entitlements accrued in the past, the remuneration for this entitlement upon termination of the employment relationship (and not the fictive consumption of vacation days after the termination of the employment relationship) is also relevant when calculating the compensation.
Draft of the 2nd Organizational Reform Act for the Austrian Tax and Customs Authorities “FORG”
The Organizational Reform Act for the Austrian Tax and Customs Authorities will change the respective competences of these administrative bodies from 1. July 2020 onwards. Starting with that day, only the Finanzamt Österreich, the Finanzamt für Großbetriebe, the Zollamt Österreich and in addition to the Prüfdienst für lohnabhängige Abgaben und Beiträge an Amt für Betrugsbekämpfung will be responsible for the Austrian taxes and customs duties. The 2nd Organizational Reform Act for the Austrian Tax and Customs Authorities shall change the provisions of the Federal Fiscal Code again and aims at optimizing the procedures. Until 11. March 2020 the draft is subject to a review.
In particular, the following steps shall be implemented:
- Co-ordination among tax offices: Written requests can be sent to Finanzamt Österreich that digitizes them and forwards them to the Finanzamt für Großbetriebe or the Amt für Betrugsbekämpfung if the latter are competent. For the taxpayer, the date when the request is received by Finanzamt Österreich is relevant if the other offices are stated correctly.
- Further competences for Finanzamt Österreich: Among other things, this tax office is competent for new taxpayers or for entrepreneurs that have no tax number but request a VAT-Code.
- Central Service: This department shall safeguard that the interpretation and execution of tax laws is identical in Austria. Moreover, it shall train the employees of the tax administration.
- Transition from old to new structure: The new institutions will take over pending cases if the competence changes. Until December 31, 2021, it is irrelevant if a taxpayer addresses an incorrect tax office or customs office. The competent new office has to deal with the request nevertheless.
Andreas Kronawetter / Clemens Endfellner
Overview of fines on violations of various reporting obligations
Austrian fiscal criminal law does not only sanctions tax evasion, but also various reporting obligations. There are fines in connection with the obligation to register the beneficial owners of certain legal entities, the EU reporting obligation concerning the mandatory automatic exchange of information in relation to reportable cross-border arrangements, the obligation of owners of online-marketplaces according to the Austrian VAT Act, the reporting obligation of multinational corperation’s, the obligation to report gifts and the obligation to report certain payments into other countries. Only in some, but not in all cases, fines can be avoided by a voluntary self-disclosure of the violation .
“Last-minute”-surcharge for voluntary self-disclosures: Actual awareness of an upcoming tax or customs inspection is decisive
If a voluntary self-disclosure is filed after the “formal notification or any other announcement” of a tax inspection, a “last-minute”-surcharge of up to 30 % will have to be paid in addition to the tax payment in order to obtain impunity.
According to the latest case law of the Austrian Supreme Administrative Court it is sufficient that the taxpayer has actual awareness of an upcoming tax or customs inspection (§ 29 Abs 6 FinStrG) and therefore has to expect an increased probability that the offense will be discovered. The form of getting awareness is not decisive: even phone calls and e-mails can trigger the “last-minute”-surcharge.
Stefan Papst / Wolfgang Gurtner
Austrian Administrative Supreme Court on the beneficial ownership in relation to real property
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 – Dec 31, 2015) or 30 % (Jan 1, 2016 – present) respectively. The tax base depends (inter alia) on the acquisition date, i.e. if Austrian real property was acquired before April 1, 2002 the tax base is in general calculated on a lump sum basis (14% of the sales revenue), otherwise the tax base is the difference between the purchase price and the acquisition costs. In order to determine the acquisition date of real property the conclusion of the purchase agreement is in general the relevant point in time. However, if the beneficial ownership passed prior to signing a purchase contract due to respective agreements, the acquisition date for tax purposes may be diverging to civil law. The Austrian Administrative Supreme Court recently decided in a case, in which a tax payer concluded a rental agreement and an option agreement for the acquisition of the respective property at the same time (in October 2001). The court concluded that such agreements are not constituting the beneficial ownership over the respective property, as the tax payer may or may not exercise the option to acquire the property and as the option agreement further provided to exercise the option by the taxpayer or the taxpayer’s wife. As the acquisition date (i.e. the conclusion of the purchase agreement after exercising the option) was after April 1, 2002, the tax base had to be calculated as the difference between the purchase price and the acquisition costs.
Markus Vaishor / Katrin Postlmayr
Austrian DST: Implications of CJEU decisions and new information from Ministry of Finance
Austria recently introduced a digital services tax for digital advertising services as from 1 January 2020. In general, the Austrian digital services tax is imposed at a rate of 5% on the turnover from advertising services rendered by service providers in Austria.
The CJEUs recently ruled that Hungarian advertising tax and the progressive tax on store retails trade do not violate the EU freedom of establishment. As there have been similar concerns regarding Austrian DST in the light of these decisions it appears unlikelier that Austrian DST violates EU law. Check our EuroTaxFlash for more information on these decisions.
Furthermore, the Austrian Ministry of Finance published new information regarding the practical implementation of Austrian DST and answered various questions (please refer to our International TaxNewsFlash).
Markus Vaishor / Florian Popl