English Summary 04/2022

Obligation for sustainability reporting even without capital market touch points for large companies

In Austria, ca 1.800 companies will have to issue a sustainability report for the first time (ESG reporting as part of the management report). According to our experience gathering and preparing the necessary data as well as the alignment within the company (including the tax function) can be challenging. Large companies may benefit from an extended preparation period as the current draft of the respective Directive foresees the first report for 2025. It is recommendable to use this additional time also for tax preparation measures such as implementation of a tax compliance management system. 

A. Helnwein / S. Stadik

Tax treatment of Ukraine-aids

The Austrian Ministry of Finance recently published on information on the Austrian tax treatment (for VAT and income tax purposes) of donations and other aids for Ukraine.

P. Mayr

Expanded AFRAC statement on the impact of the Ukraine crisis on corporate reporting

The Austrian Financial Reporting and Auditing Committee recently published an expanded statement regarding accounting issues that have arisen due to the Ukraine crisis.

On the occasion of the Ukraine crisis and the related economic impact on Western businesses and the accounting issues that have arisen in this regard, the AFRAC (Austria Financial Reporting and Auditing Committee) has recently published an expanded statement (see here). This statement is an extension of the brief note already published in March (see here) and was prepared on short notice by an AFRAC expert group with knowledge as of April 4, 2022. The German IdW has also recently published a corresponding statement (see here). Further developments remain to be seen. Your KPMG advisor will be delighted to answer any detailed questions you may have.

F. Kleemann / F. Popl

Austrian Ministry of Finance published information on applications for reductions of tax prepayments made due to rising energy costs

The Austrian Ministry of Finance recently published an information in which a uniform procedure was defined with regard to applications for reductions of tax prepayments made due to rising energy costs.

Taxpayers are required to credibly demonstrate that they are specifically significantly affected economically by the increase in energy costs, which in the opinion of the Ministry of Finance can be assumed in two cases:

1. In the financial year 2021 (or FY 2021/2022) the taxpayer was entitled to an energy tax refund

2. It is credibly shown that the share of the energy costs account for more than 3% of total costs of the business

In these cases advance payments for 2022 can be reduced to 50% of the previously determined amount provided that the advance payments have not already been reduced due to the changed economic conditions. The possibility of setting advance payments even lower or at zero in individual cases remains unaffected which requires substantiated evidence. Your KPMG advisor will be delighted to assist you in preparing a corresponding application for reduction of tax prepayments.

F. Kleemann / F. Popl

Limitation of deduction for severance payments with in a social plan is unconstitutional

The Austrian Constitutional Supreme Court has decided that the limitation of the deductions for severance payments within a social plan is unconstitutional, because those severance payments are different from voluntary individually agreed severance payments. However, the limitation is still considerable, since the annulment of the underlying provision will only enter into effect after the end of 31.12.2022.

A. Shubshizky

Information on the new exemption for employee profit participations published by the tax administration

On March 25^th, 2022, an information on the new exemption provision for employee profit participations, that is applicable for payments from 1.1.2022 onwards, was announced by the Austrian tax administration. In a Catalogue of 17 questions and answers the relevant legal aspects were depict4ed. Some questions have still remained unclear, however.

K. Daxkobler

Foreign Certificates of Residence – Update Portugal

The Austrian tax authorities require the taxpayer in many situations (e.g. for a withholding tax relief directly at source or a refund procedure) to deliver foreign certificates of residence. Basically, such certificates have to be issued on certain Austrian forms. However, Austria consulted bilaterally with several treaty partner states on exceptions, according to which certificates of residence may also be evidenced using foreign forms. This list of exceptions has been recently extended by Portugal.

F. Rosenberger

Austrian Federal Finance Court on statute of limitations: rejection of arbitrary stockpiling of official acts of assertion

Outwardly recognizable official acts for the enforcement of a specific tax claim or for the identification of a specific taxpayer can delay the occurrence of the statute of limitations under tax law. In the present decision, the Austrian Federal Finance Court Court had to decide whether the mere inspection of the land register or general requests for supplements without referring to a specific tax claim can extend the statute of limitations. The court clearly rejected a general stockpiling of extension acts through unspecific queries of (public) registers.

S. Papst / W. Gurtner

Filing an appeal (“Bescheidbeschwerde”) instead of filing the necessary application to present the appeal to the Austrian Federal Finance Court (“Vorlageantrag”) is invalid

The tax advisor of an entrepreneur filed an appeal (“Bescheidbeschwerde”) against a decision of the tax office (“Beschwerdevorentscheidung”) instead of the necessary application to present the appeal to the Austrian Federal Finance Court (“Vorlageantrag”). According to the Federal Finance Court, there is no evidence in the appeal that it was intended as an application to present the appeal to the Federal Finance Court, and consequently the appeal cannot be interpreted as such an application. Therefore, the filed appeal is rejected being the wrong measure under Austrian procedural tax law. 

C. Endfellner

Rental agreement for owner occupation of co-owned developed real property not recognized for tax purposes

The Austrian Federal Finance Court recently ruled that in case of owner occupation of co-owned developed real property, the rental agreement between the co-owners is to be regarded as a mere usage arrangement. Therefore, the related income and expenses as well as the corresponding VAT and input tax were disregarded for tax purposes.

F. Kleemann / F. Popl

Capital gains from the sale of real property derived by individuals: Austrian Administrative Supreme Court on planning expenses of never built properties

The Austrian Administrative Supreme Court recently clarified the income tax treatment of planning expenses (e.g. costs for the architect) in relation to the intended construction of a building. If the respective property is never built and the respective land is then sold by an individual, the planning expenses for the never built property cannot be deducted in relation to the taxable capital gains from the sale of real property derived by the individual.

M. Vaishor / K. Postlmayr

Austrian Administrative Supreme Court on the personal liability of a representative for the calculation of property income tax

Lawyers and other representatives calculating capital gains tax for the sale of real property are personal liable for the payment of the tax as well as for the appropriate calculation of the tax, if this calculation is made against one’s better knowledge based on the facts provided by the vendor. The Austrian Administrative Supreme Court ruled in a recent decision that in case of an incorrect calculation leading to personal liability of a representative the tax authorities have to explicitly state why the calculation was made against one’s better knowledge.

M. Vaishor / A. Lunzer

Austrian Administrative Supreme Court on sale of LP-interests of a property owning partnership

The Austrian Administrative Supreme Court recently re-confirmed that the sale of partnership interests in tax-transparent partnership is deemed as a sale of the assets owned by the partnership. Consequently, if the partnership holds Austrian real property, Austrian capital gains tax on the sale of real property applies. 

M. Vaishor / A. Lunzer

Austrian Administrative Supreme Court on the taxation of waiving a prohibition of encumbrance and sale against payment

The Austrian Administrative Supreme Court recently decided in relation to the taxation of waiving a prohibition of encumbrance and sale against payment. Such payments are in general subject to Austrian income tax for individuals. However, waiving a usufruct right against payment is not taxable for an individual (if it is achieved in the taxpayers’ non-business income). If the tax payer waives a prohibition of encumbrance and sale at once with a usufruct right for a lump sum compensation, the value of the usufruct right must be subtracted from the lump sum in order to determine the income tax base for the taxable waiver of the prohibition of encumbrance and sale, as for the latter a value can not be calculated. 

M. Vaishor / K. Postlmayr