Austria: Taxes regarding assessment periods subject to prescription

In the past it was not possible to correct tax assessments notes referred to tax assessment periods subject to prescription even in the event the underlying facts were having consequences on the tax assessment periods not yet subject to prescription. This circumstance was generally known as the principle of “prohibition of subsequent recognition”.

Pursuant to the legal practice followed by the Administrative court, errors incurred during the process of determination of the income subject to taxation – as far as errors concern more than one tax assessment period – must be traced back to their origin (taxation in accordance with the accruals concept). On the basis of the prohibition of subsequent recognition any correction not respecting this concept is unacceptable.

The correction for tax purposes of an error in the year in which the error originated can be made only in the framework of existing procedural options. If procedural law does not allow for a correction of the inaccurate tax assessment note, corrections remain without effect on the result. Consequently expenditure and earning may be computed or not, or computed twice, with a positive or a negative result for the taxpayer.

Following the tax amendment law 2011, as of 1 September a procedural possibility has been introduced in order to make it possible to correct errors incurred in the tax return dating from tax assessment periods already subject to prescription but having an impact on more than one tax assessment period, also referred to tax assessment periods already subject to prescription.

The new rule applies only to errors referred to more than one tax assessment period which otherwise would be protected by prescription for tax purposes. Thus the correction may be made only for periods included in the absolute prescription time frame of ten years. According to this rule, errors incurred from 2001 on may be corrected.

 

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