Austria: Group taxation

According to the Austrian group taxation regime tax losses of group members may be offset against tax profits of other group members. The main condition for this procedure is that there is a participation of more than 50% of the share capital and the majority of voting rights during the whole fiscal year.

If a tax group should be established or if an already existing tax group should be extended for the tax year 2009, the group application forms have to be signed by December 31 at the latest. This rule applies to companies with balance sheet date 31 December 2009. The signed group application forms have to be filed with the Austrian tax administration within one month after signing.

If foreign subsidiaries are currently incurring losses and if under the foreign tax law loss carry forwards are subject to time limits, it could be convenient to consider the inclusion of the foreign subsidiaries into an Austrian tax group.

A depreciation of participations in group members to the lower fair market value is tax-neutral for the parent company. In the event the establishment of a new tax group should be considered in 2010, potential depreciations of future group members should be taken into account when compiling the financial statements for 2009.

The cancellation of an existing tax group in 2009 can be considered if participations in group members have to be depreciated in the financial statements 2009. If a group members suffers high losses in 2009, which cannot be offset against taxable profits of another group member, it might be indicated to – partly – cancel the existing tax group. A new tax group could then be established as soon as the companies have achieved a return in the profit zone.

Group members can completely offset their taxable income against the pre-group tax loss carry forwards. In this case the 75% limitation does not apply. However, a tax group must exist for at least three entire fiscal years before it is cancelled or else corporate income tax will be reassessed as if the group never existed. When establishing a new group, a new three year period will start.

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