English Summary 01-02/2023

Carbon Border Adjustment Mechanism (CBAM): update to the reporting obligations starting in 2023

As already written in our Tax News of October 2022 the „fit for 55“ package includes the implementation of a Carbon Border Adjustment Mechanism (CBAM). In December 2022 a provisional agreement was reached to set up CBAM which also includes changes compared to the previous draft of the Directive of July 2021. These changes include a postponement of the start of the reporting obligations in 2023 to October 1, 2023 and also includes a wider scope of covered goods.

A. Helnwein / S. Stadik

Renewable Energy Cooperations

This article focuses on the most important features of Renewable Energy Cooperations – their legal structure, potential members, subsidies available, opportunities to reduce grid-costs and tax-aspects to be considered when setting up such a cooperation.

B. Matzka / K. Kovacs

ATAD3 to come into force 2024: Directive is subject to intense discussions

The European Parliament recently issued their report on the contemplated “Unshell Directive” (ATAD 3). The Directive aims at preventing the misuse of shell entities for tax purposes. According to our understanding, the EU-commission and the member state are currently discussing the draft directive and it is possible that there will be major changes to the wording. Based on the initial draft, member states need to adopt the Directive into domestic tax law until Jan 1, 2024.

F. Brugger / C. Marchgraber / M. Vaishor

Definitely no general withdrawal from CIT group in the event of a merger with a corporation outside the tax group

Under Austrian tax law, financially related corporations may form a tax group for CIT purposes. If a group member is merged into a non-group corporation (merger under Art I Austrian Reorganization Tax Act), this group member generally leaves the tax group (if the statutory minimum period of three years is not fulfilled, there is a reversal for tax purposes – the corporation is treated as if it had never been a member of the tax group).

In its recent ruling, the Austrian Administrative Supreme Court decided that there will be no withdrawal from the tax group if the acquiring corporation is part of the tax group on the day after the effective date of the merger (and the group parent or another group member already held a sufficient share in the acquiring company prior to the merger). 

L. Andreaus / J. Derflinger

CFC Taxation: Russia qualifies as a low-taxed country

Since January 1, 2021, the EU’s list of non-cooperating jurisdictions leads to legal consequences in Austria. According to Art 10a sec Austrian Corporate Income Tax Act, countries that are included in this list are deemed to be low-taxed jurisdictions which is relevant for the application of the Austrian CFC rules,

In the past, this has only been practically relevant in exceptional cases, because the EU list has usually included “exotic” countries (e.g. the Marshall Islands, Bahamas or Vanuatu). With the latest amendment, however, Russia has now been added to this list. Since Austrian companies have historically been economically involved in Russia (at least in the past), the question arises as to what practical effects result from this development.

C. Marchgraber

Austrian Administrative Supreme Court: Tax-exempt subsidies reduce basis for research premium

Recently, Austrian case law dealt with the question whether or not tax-exempt subsidies reduce the base for the research premium. Usually, the subsidies do reduce the base.

M. Petritz / O. Mavher / M. Deichsel

Draft bill on cross border company reorganizations published

Recently, a draft bill regarding the implementation of the EU-directive 2019/2121 amending the directive 2017/1132 as regards cross-border conversions, mergers and divisions was issued.

L. Franke / A. Hiermann

The GesDigG 2022: 5 Simplifications of Corporate Law

The Corporate Law Digitisation Act 2022 (GesDigG 2022), which entered into force on 1 December 2022, creates a number of simplifications in the area of corporate law. The most relevant topics for practice include

a. the possibility of online execution of company register applications for sole proprietors,

b. the permission to maintain the share capital account of a GmbH at certain European banks,

c. facilitations for the disclosures of domestic branches,

d. the acceleration of the companies register procedure for new registrations, and

e. the creation of a free short information from the companies register.

A. Hiermann / T. Androsch

“Amount B” – Transfer Pricing Support for Distribution Entities through standardized benchmarking?

Slightly hidden behind the public awareness of the global minimum taxation (“Pillar Two” or “GloBE”) and the market jurisdiction approach for the global big players (“Amount A” under “Pillar One”) there is another issue rising in the context of reforming the international business taxation on the OECD/G20 level: “Amount B” shall bring – also for smaller and medium sized MNE groups – a tool to develop a standardized, simplified arm’s length benchmark for distribution units.

F. Rosenberger / T. Hahn

Income tax calculation in case of tax residency abroad

Income subject to tax in the residence state according to the provisions of the respective double taxation treaty, may be considered in the income tax computation for the purposes of determining the tax rate (Austria has progressive income tax brackets) even if a taxpayer subject to unlimited tax liability according to domestic tax law has his center of vital interests and, thus, his tax residence abroad.

K. Daxkobler / A. Schlögl-Jettmar

Changes of the double tax treaty between Austria and the United Arab Emirates applicable since January 1^st 2023

The protocol changing the DTT between Austria and the United Arab Emirates is applicable since January 1, 2023. The main changes are the introduction of a 10% withholding tax on portfolio dividends, a switch from the exemption to the credit method and the update of the information exchange clause to the current OECD standard.

G. Gottholmseder

Notifications according to Art 109a and Art 109b Austrian Income Tax Act

In respect of fees paid in 2022 for certain services outside of employment relationships to individuals or partnerships (associations) without legal capacity and for certain outbound payments effected in 2022, entrepreneurs as well as corporations under public and under private law have to submit a notification according to Art 109a ITA resp. Art 109b to the tax office by way of electronic data transmission until 28^th Feb 2022. 

K. Daxkobler

Changes of the regulation on the value of benefits in kind (in German: Sachbezugswerteverordnung) in connection with E-Mobility

On December 30, 2022, the long-awaited changes of the Regulation on the value of benefits in kind were published in the Federal Law Gazette: On the one hand, it standardized the recognition of temporary and permanent conversion of benefits for payroll tax and contribution law purposes (reduction of benefits in connection with the possibility of using an employer-owned electric car or (electric) bicycle). On the other hand, there are regulations on the valuation of the imputed income in connection with the free charging of electric cars and electric bicycles as well as related cost reimbursements. Details can be found in our Tax Personnel News 10/2022 (Änderungen der Sachbezugswerte-VO iZm E-Mobilität).

K. Daxkobler

Regulations and values in social security, labor and income tax law applicable in 2023

Recently, the regulations and values in social security, labor and income tax law were published for 2023.

K. Daxkobler

DTT Austria-Germany: Exit taxation for shares in real estate companies 

In the EAS information 3442 of December 14, 2022, the Austrian Federal Ministry of Finance (MoF) dealt with the question of whether the sale of immovable real estate assets of a real estate limited liability company in the legal form of a GmbH resident in Austria leads to an exit tax according to Austrian income tax law (Art 27 sec 6 subsec 1 Austrian Income Tax Act) for the shareholder resident in Germany. The MoF has concluded that the exit tax does not apply in the year in which the property is sold by the real estate company, but in the following year if the shares are sold in the subsequent year, and not simultaneously in the year of the sale of the property. Due to the contractual provisions in the DTT Austria-Germany in Art 13 sec 2 in connection with the Art 3 of the Protocol to the DTT Austria-Germany, whereas the evaluation of the status of a “real estate company” is determined, based on the circumstances of the last balance sheet date before the sale, the exit tax will apply.

C. Juritsch

RETT: Austrian Administrative Supreme Court rules on partnerships

In Austria, not only the acquisition of a real property by way of an asset deal is subject to real estate transfer tax (“RETT”) as the unification of at least 95% of the shares in a property owning partnership or company triggers RETT (at 0.5% of the real estate value), as well. According to Art 1 sec 2a RETT Act, RETT is triggered if at least 95% of the partnership interests are transferred to new partners within five years. Furthermore, according to Art 1 sec 3 RETT Act, RETT is levied if at least 95% of the shares in a company or partnership are either transferred or unified within the hands of one shareholder or members of the same tax group.

Recently, the Austrian Federal Finance Court confirmed the position previously argued by KPMG that only the direct shares or partnership interests respectively are relevant for the unification of shares. Thus, unlike for instance in Germany, indirect shareholder changes do not lead to (Austrian) RETT. Furthermore, the Austrian Administrative Supreme Court confirmed in a recent decision that both Art 1 sec 2a and Art 1 sec 3 RETT Act apply to partnership interests.

F. Fraberger / C. Plott / M. Vaishor

Austrian Federal Finance Court on inter-bank sales: VAT exemption includes Austrian branches of foreign banks

Contrary to the view taken by the Austrian tax authorities, the Austrian Federal Finance Court accepts the applicability of Art 6 sec 1 subsec 28 Austrian VAT Act (“inter-bank sales”) to Austrian branches of foreign banks. According to the Austrian Federal Finance Court the VAT exemption does not require mainly VATable and VAT exempt sales in Austria. This corresponds to the clear legal wording of the provision, so the Court. 

S. Haslinger / M. Milekic

Timely filing of documents at the tax authority: different consequences for submissions via the Österreichische Post AG (Austrian Post PLC) and submissions via other postal service providers

The taxpayer sends an appeal to the tax authority via a freight forwarder. According to the current case law of the Austrian Tax Court, for this type of delivery, sec 108 para 4 Federal Fiscal Code does not apply: Due to this section the time for the delivery of the letter at the tax authority is not included in the time available for an appeal. According to the Tax Court, only in case the taxpayer uses the Österreichische Post AG (Austrian Post PLC), the time for the delivery is not included in the time available for an appeal. If the taxpayer uses a postal service provider different from the Österreichische Post AG, the appeal must arrive at the tax or customs office within the one-month period. If this period is not met due to an unexpectedly longer time of the delivery, the appeal has to be rejected as too late.

C. Endfellner

Changes to the ordinance on investment fund reporting (FMV 2015)

Recently, in particular due to the changes to the taxation of cryptos, the Austrian Ministry of Finance issued a revised edition of the reporting pattern based on the ordinance on investment fund reporting.

A. Cserny / A. Eichberger

Financial support for energy costs from non-profit, charitable or church organizations within the framework of the KIG 2023

As part of the Municipal Investment Act 2023, Austrian municipalities were given the opportunity to use up to 5% of the funding to cover energy costs for non-profit, charitable or church organizations. The application and distribution are at the discretion of the respective municipality.

E. Mueller