English Summary 5/2024

Tax allocation agreements within corporate tax groups pursuant to Art. 9 Corporate Income Tax Act raise questions in connection with Pillar II. Are tax allocations even considered taxes within the meaning of the Minimum Taxation Act? What are the accounting implications of such agreements? What are the accounting implications if loss-making group members do not receive a negative tax allocation but instead agree on internal loss carryforwards?

C. Marchgraber

On 8th October 2024, the Council of the European Union (EU) adopted the EU list of non-cooperative jurisdictions for tax purposes The EU list of non-cooperative jurisdictions for tax purposes, so-called EU-Blacklist is part of the EU’s work to fight tax evasion and avoidance. It is composed of countries which have failed to fulfil their commitments to comply with tax transparency and fair taxation within a specific timeframe, and countries which have refused apply BEPS-related measures. From an Austrian tax perspective, the list is in particular of relevance for provisions regarding CFC (Art. 10a KStG), a potential DAC-6 reporting obligation (Art. 5 sec. 1 lit. b EU-MPfG) as well as public country-by-country reporting.

T. Hahn / J. Pimingstorfer

The Austrian Federal Finance Court recently dealt with RETT in case of an endowment of shares in a real estate owning company to a private trust.

M. Vaishor

Rulings pursuant to Art. 118 General Federal Fiscal Code are strictly application-based. This means that any information provided by the tax authority that goes beyond the request is unlawful. Furthermore, a ruling request cannot be extended in the appeal proceedings.

S. Papst / M. Formanek

The tax representative who is entitled to receive documents on behalf of his client, received a corporate tax assessment notice leading to an additional payment. The tax representative forwarded this assessment notice by mail to his client. The client then paid the tax burden too late and claims, that he had not received the assessment notice in time. As the payment was effected too late, the Austrian Federal Finance Court confirmed the tax office that the late payment penalty cannot be canceled.

C. Endfellner

A recent decision by the Austrian Federal Finance Court concerned the liability of associations under financial criminal law for customs offences committed by subcontractors and the organizational culpability of managers. At issue was the financial criminal law liability of a service provider in the customs sector for improper handling of customs procedures, although significant violations were caused by subcontractors. The decision emphasizes the need for managers of associations to establish clear responsibilities and internal controls in the customs area to avoid consequences under Aus-trian financial criminal law.

S. Papst / W. Vötter

According to Art. 26 Austrian VAT law, the legal provisions for customs duties apply mutatis mutandis to VAT, but not with regard to the definition of import. According to Art. 1 sec. 1 subsec. 3 Austrian VAT Act, an import is deemed to have taken place if goods are brought into the country from the territory of a third country. Accordingly, the “importation of goods” is the transfer of goods that are not in free circulation into the Community. If the import process lies entirely within the supplier's sphere of influence, this is undoubtedly attributable to the supplier according to the Austrian Administrative Supreme Court.

E. Freitag / A. Mühlberger

The Austrian Ministry of Finance has published the information regarding “comprehensive administrative assistance in income taxes”. In this information the Austrian Ministry of Finance (BMF) lists the countries, where the comprehensive administrative assistance in income taxes is established. The information is an update to the last version from 29th November 2022.

T. Hahn / J. Pimingstorfer

In the present case, the classification of contractual relationship as service contract or work contract is at issue. According to the Austrian Federal Administrative Court the contract of the newspaper deliverers can’t be classified as a work contract. However, in the opinion of the Austrian Administrative Supreme Court the reasoning of the judgement is not comprehensive. Based on the facts written down in the judgement of the Austrian Federal Administrative court a legal classification of the contractual relationship is not possible. Therefore, the Austrian Administrative Supreme Court annulled the judgement of the Austrian Federal Administrative Court. In particular, the owed delivery success, a general right of representation, and the use of one's own car indicate the existence of a contract for work for newspaper deliverers.

K. Daxkobler / S. Rettenbacher

A taxpayer declared Liechtenstein income to the tax authorities in Liechtenstein and disclosed this to the Austrian tax office. The tax office later reclassified the income, which led to the Liechtenstein income being effectively taxed in Austria. According to the Austrian Federal Finance Court, the taxpayer assumed that he had chosen a legal tax avoidance option. Due to the extremely complex nature of tax law, he was also unable to recognize the incorrect legal opinion of his tax advisor on the specific facts of the case. Similarly, the tax advisor was not accused of intent due to the lack of case law on the subject.

S. Papst / G. Schaunig

Undisclosed profits from cryptomining and the exchange of cryptocurrencies in 2013 and 2014 do not constitute tax evasion. In the absence of guidelines, judicial decisions and explicit regulations, the taxpayer did not have to assume a tax liability (according to a recent decision by the Austrian Federal Finance Court).

S. Papst / G. Schaunig

In its recent decision, the Austrian Federal Finance Court concluded that the lessor has the power of disposal over rented machinery upon importation. Accordingly, the lessee cannot claim input VAT deduction from the import VAT due to the lack of power of disposal.

E. Freitag / C. Bianco

If an individual taxpayer rents out properties, the tax treatment of refurbishments depends on the type of refurbishment and in particular if the use value of the property increases or the remaining useful life is prolonged. For instance, exchanges of certain building parts such as windows, doors or electric/plumbing installations are only tax-deductible spread over 15 years provided that the increase of the use value is deemed as significant (25%-threshold). The Austrian Administrative Supreme Court recently confirmed in a case where the tax payer owned 39 condos in one building complex, that the 25%-threshold has to be applied for each individual condo and not based on the whole building.

M. Vaishor

In 2015, an undeveloped plot of land was sold to M-GmbH and eight individuals, who agreed in the purchase contract to subdivide and develop the land. In 2016, the subdivision was completed, with the parties involved in the court process in question and M-GmbH becoming co-owners. The parties later accepted a construction offer from H-GmbH, a related party to M-GmbH. The Austrian Federal Finance Court saw no close connection between the land purchase and the building contract, limiting the relevant consideration for real estate transfer tax (RETT) purposes to the purchase price of the land plot only. However, the Austrian Administrative Supreme Court ruled that a plot is considered developed for RETT purposes if there is a close material connection between the purchase and building contracts, regardless of the timing of the agreements. Construction costs are, therefore, part of the tax base for the calculation of RETT unless the buyer is considered the “builder”, which was not the case here, as the parties paid a fixed price and had no real influence over the construction project.

M. Vaishor / B. Stangar

Tax returns are not submitted by the due date: If the authority is unaware that a tax claim has arisen, this constitutes completed tax evasion if the defendant seriously believes that the evasion is possible when the obligation to make a declaration arises and accepts it (according to a recent decision by the Austrian Federal Finance Court).

S. Papst / G. Schaunig

UBO-Reporting obligations had already been significantly enhanced by amendments to BORA that became effective on July 1, 2024. Nonetheless, the Ministry of Finance (MoF) already presented new BORA-Amendments as part of a new FM-GwG-Anpassungsgesetz in October 2024, targeting full disclosure of formal and informal nominee-arrangements and enhanced transparency of foundations, similar legal entities, trusts and trustlike arrangements, to prevent the concealment of beneficial ownership and control structures of such entities. Thus, reporting obligations and respective financial crime offences in case of violations shall be generally intensified and enhanced with respect to UBOs, Nominee Shareholders, Nominee-Directors, and Nominators, as well as for foundations, trusts, and similar legal arrangements. The new law was passed by the Parliament.

Christiane Edelhauser