English Summary 09/2021

Investment premium: Deadline Sept 30, 2021 for settlements needs to be considered

As one of the COVID-relief measures, Austrian businesses may apply for an investment premium of 7%/14% for certain investments into fixed assets under several requirements. In order to apply for the investment premium, invoices need to be settled with the competent authority. There are two relevant deadlines that need to considered:

• For investments which were put to its intended use until June 30, 2021 and were fully paid, the settlement with the competent authority needs to be done until Sept 30, 2021.
• Otherwise, the invoices need to be settled with the competent authority within three months. Therefore, for instance, if an investment was put to its intended use and paid on July 15, 2021, the settlement needs to be done until Oct 15, 2021

O. Mavher / M. Petritz

 

Deadline September 30, 2021: Application for a refund of input VAT from other EU-countries of the year 2020 and review of (corporate) income tax advance payments

The deadline to apply for a reduction of preliminary tax payments for 2021 ends at September 30, 2021. This year, however, no interest for the assessment of 2020 will be charged if the final (corporate) income tax burden exceeds the advance payments due to the Austrian COVID-relief measures. Furthermore, the application for a refund of input VAT from other EU-countries of the year 2020 must be filed until September 30, 2021 to the Austrian tax office.

F. Kleemann / F. Popl / B. Stangar

 

Standard Audit File Tax – a file format with revolutionary potential

The Standard Audit File - Tax as a standardized tax inspection file will revolutionize not only the previous work of accounting departments at companies or tax consultants, but also the methods of tax audits by the tax office: the level of detail of the data acquisition, the tax audit with probable determinations by the tax inspectors and the potentially preceding necessity of a voluntary self-disclosure by the company to avoid criminal proceedings. It is no longer a question of whether this file format will come, but only when.

S. Papst / M. Huber

 

Austrian Federal Finance Court confirms jurisprudence on missing signatures on tax group applications

In general, corporations are taxed individually in Austria. However, affiliated companies may form a tax group for CIT purposes under certain conditions. As result the income of all tax group companies is pooled and taxed at the level of the tax group parent. In order for a tax group to be effective for tax purposes, a formal application for group taxation must be filed with the responsible tax office in addition to the fulfillment of substantive legal requirements (e.g. financial connection, etc.).

Regarding the formal application for group taxation the Austrian Federal Finance Court recently confirmed its strict jurisprudence on the requirement of a tax group application being signed by all legal representatives of the group parent and all involved group entities. Otherwise there is a material defect which cannot be remedied and the group application must be rejected.

M. Vaishor  / F. Popl

 

Utilization of minimum corporate tax credits in case of merger

According to Austrian tax law, Austrian companies have to pay minimum corporate tax (usually amounting to EUR 1,750.00 p.a.) if the taxable result leads to a lower corporate tax burden. However, such minimum corporate tax can be offset with future “actual” corporate tax payments. In case of a merger such minimum corporate tax credits are transferred to the absorbing company.

In a recent case the Austrian Federal Finance Court ruled on the following case: A company was merged into another company with the effective date Dec 31, 2011. The absorbing company’s balance sheet was Oct 31, 2011, i.e. prior to the effective date of the merger. Due to the provisions of the Austrian Income Tax Act and General Federal Fiscal Code, the Austrian Federal Finance Court decided that the minimum corporate tax credit can already be utilized in the absorbing company’s tax assessment 2011. However, the Austrian tax authorities filed an appeal against this decision to the Austrian Administrative Supreme Court.

M. Vaishor

 

Reorganization Austrian Tax Authorities: Grace period for new bank account numbers expires on September 30^th, 2021

As of January 1^st, 2021 the reorganization of the financial administration (Tax Office Austria) came into force. The previous tax offices were replaced by the merged offices of the Tax Office Austria, for which new bank accounts were implemented on January 1^st, 2021. Until now, payments to old bank accounts of the tax offices were automatically transferred to the correct bank accounts.

As of September 30^th, 2021, however, payments to old account numbers will no longer be accepted. Thus, in order to avoid negative consequences of non-payment such as late payment interest etc accounting systems should be checked to ensure that the correct bank account numbers are used.

Old tax office until 2020/12/31	Since 2021/01/01: Local  offices	New bank account since 2021/01/01
FA Klagenfurt FA St. Veit Wolfsberg	DST Klagenfurt St. Veit Wolfsberg	AT92 0100 0000 0556 4572
FA Kitzbühel Lienz FA Kufstein Schwarz	DST Tirol Ost	AT62 0100 0000 0554 4839
FA Bregenz FA Feldkirch	DST Vorarlberg	AT63 0100 0000 0557 4988
FA Neunkirchen Wr. Neustadt FA St.Pölten Lilienfeld	DST Niederösterreich Mitte	AT08 0100 0000 0550 4295
FA Gänserndorf Mistelbach FA Hollabrunn Korneuburg Tulln	DST Weinviertel	AT28 0100 0000 0550 4226
FA Bruck Leoben Mürzzuschlag FA Graz Umgebung	DST Steiermark Mitte	AT38 0100 0000 0553 4698
FA Wien 4/5/10 FA Wien 9/18/19 Klosterneuburg	DST Wien 4/5/9/10/18/19 Klosterneuburg	AT31 0100 0000 0550 4075
	Tax Authority for Large Taxpayers	AT88 0100 0000 0550 4116

F. Kleemann / F. Popl

 

Germany introduces option to check the box on partnerships 

In Germany and Austria, partnerships are – in contrast to corporations – taxed as transparent entities, i.e. partnerships are no tax subjects and the respective income is allocated to and taxed at the shareholder’s level.

Germany, however, recently introduced an option for partnerships to be taxed in the same way (non-transparent) as corporations upon request (“check the box”). The new rules are applicable for financial years beginning after December 31, 2021.

As Austrian tax law still considers such opted partnerships as transparent entities, it is expected that there will be conflicts of qualification and attribution in cross-border situations between Austria and Germany and that an opted partnership will be deemed as a hybrid entity. Possible consequences are double taxation in Austria and Germany. Thus, an in-depth analysis of possible tax consequences is recommended before the opt-in.

M. Vaishor / F. Popl

 

Decision of the Austrian BFG on repayment of Austrian withholding tax on dividend payments considering the information of the Ministry of Finance on cum-ex-transactions

The Austrian BFG rejected an appeal against a decision of the tax office which refused the repayment of WHT on dividend payments. The court acknowledged the principles of the information of the Austrian Ministry of Finance concerning the transition of the economical ownership. Due to the lack of jurisdiction of the Austrian Administrative Court the BFG allowed an ordinary appeal.

A. Cserny

 

Austrian Federal Finance Court on input VAT deduction of a managing holding

The Austrian Federal Finance Court  recently decided that a management holding that intervenes in the management of the affiliated company is engaged in its own economic, business activity. General costs in connection with the business activity are therefore entitled to input vat deduction.

E. Freitag / A. Mühlberger

 

Austrian Federal Finance Court on non-declaration of rental income in Austria by foreign taxpayer: intentional behavior

The non-declaration of rental income in Austria was justified by a taxpayer resident abroad as follows: "It was erroneously assumed that income up to EUR 11,000.00 is exempt from income tax in Austria and, due to the applicability of the small undertakings regime, also from VAT. Therefore, no tax returns were submitted in the past.” From this argumentation of the taxpayer and the omission of seeking advice from a tax consultant or the Austrian tax office, the Austrian Federal Finance Court immediately deduced an intention to evade taxes.

Therefore, in order to avoid any risk of being accused of intentional tax evasion, foreign tax residents with income in Austria should in any case observe the following: 

-       Duty to inquire: Obtain tax advice before taking up a revenue-generating activity in Austria

-       Disclosure obligation: Registration and comprehensive disclosure of income earned in Austria to the Austrian tax authorities on time

If tax declarations have erroneously not been submitted until now and this has not yet been discovered by the Austrian tax authorities, this mistake can be corrected by filing a voluntary self-disclosure with protective effect for financial criminal law purposes.

S. Papst / W. Vötter

 

Austrian Federal Finance Court: No intentional tax evasion in case of error about applicable legal situation

If a taxpayer is mistaken about the applicable legal situation and therefore declares income in an amount that is too low, intentional behavior is not to be assumed. However, according to the case law of the Austrian tax court, if a tax advisor makes a mistake about a legal situation that has been in force for years, this constitutes a particularly gross breach of due diligence on the part of the tax advisor (BFG 3.5.2021, RV/3100747/2020).

S. Papst / S. Rettenbacher

 

Sale of real property of charitable corporate entity not part of indispensable auxiliary operations 

The Austrian Administrative Supreme Court recently ruled in the case of a charitable corporate entity (registered association) that the sale of inherited real property is not part of the indispensable auxiliary operations if the sales are only made for financing the charitable operations. The tax exemption for charitable corporates is, thus, not applicable for a sale of real property in these cases. The tax exemption is only applicable for sales of real property directly used for the fulfillment of the beneficial purpose.

M. Vaishor / F. Popl

 

Austrian Administrative Supreme Court: substantial procedural defect in case of omission of witnesses who are essential for the decision

The Austrian Administrative Supreme Court found a substantial procedural violation by the Austrian Federal Finance Court in the fact that a request for the examination of witnesses had been rejected by the Austrian Federal Finance Court: The Austrian Federal Finance Court had based its decision mainly on the written testimony of the named witness and its incompleteness, although it had not examined the requested witness.

S.Papst / M. Huber

 

Austrian Administrative Supreme Court: Revision ex officio admissible, if the amount of fees was disclosed to the tax authority, but not the parameters for determining their arm's length nature

In order to avoid an ex officio revision, the taxpayer has to disclose all decision-relevant factual parameters to the tax office. Therefore, according to a recent decision of the Austrian Administrative Supreme Court the submission of a complete list of fees paid is not sufficient for a complete disclosure of the facts relevant to the decision to the tax office, if the arm's length nature of the fees disclosed can only be assessed upon knowledge of additional factual parameters.

S. Papst / S. Rettenbacher

 

New motor vehicle taxation guidelines 2021 in force since 1 July 2021

The new motor vehicle taxation guidelines 2021 of the Austrian tax authorities have been in force since 1 July 2021 and contain a summary of the applicable motor vehicle taxation in Austria. They replace the NoVAR 2008 (guidelines for the Standard Consumption Tax) and the MSVKR (guidelines on the Motor Vehicle Tax Act and Motor-related Insurance Tax) and are to be applied in tax authority audits for past periods and to open cases, unless other provisions in laws and regulations are valid for these periods.

C. Halwachs / S. Tratlehner