You are currently browsing the archives for the Austria category

Austria: the tax returns

Alessandro PasutThe Austrian Ministry of Finance has admitted that in certain cases, such as the short-term posting of workers in Austria, it is difficult to manage the bureaucratic burden since it is necessary to give out fiscal codes and receive the tax returns whenever the 2,000 euro limit is exceeded.
If therefore it is with almost absolute certainty recognizable that the filing of a tax return with reference to the consequences of the tax avoidance agreement has no significant relevance for tax purposes, the Ministry of Finance will not demand the filing of the tax return. According to the Ministry, this certainty is reached when the following three conditions are met:
the obligation of tax exemption in Austria is without any doubt established in the double tax avoidance agreement; this consequence is applied in a corresponding way in both countries party to the agreement and, if necessary, this can be proved by a document showing the taxation in the foreign country.


 To have a consultation about the tax return in Austria by Alessandro Pasut click here!


Austria: goodwill amortization

Alessandro PasutGoodwill amortization: the Administrative Court dealt with the matter not only by stating that the restriction of goodwill amortization to the acquisition of shares in an Austrian corporation contravenes the freedom of establishment but by raising also the question of a possible violation of the prohibition to grant state aids. The Administrative Court made therefore a referral for a preliminary ruling to the Court with a view to establishing whether goodwill amortization could constitute State aid.

State aid has to be reported to the European Commission which will then decide if it is compatible with the internal market. Without approval by the Commission, State aid cannot be granted.

If the Court of Justice of the European Union should qualify the goodwill amortization as State aid, the Austrian state could be faced with an order by the Commission to withdraw this kind of aid.

To receive expert advise by Alessandro Pasut click here!


Austria: tax liability

Alessandro PasutThe Double Tax Avoidance Agreements divide the right to taxation between the parties to the agreement but do not provide for rules on procedural questions. The circumstances under which a taxpayer is obliged to file a tax return are ruled exclusively by national legislation.

Taxpayers with limited tax obligations have to file an Austria tax return of their own accord in case a tax liability arises pursuant to art. 102 of the Income Tax Law and if the Austrian sourced income is higher than 2,000 euro. The tax liability exists in the event the income is obtained from an Austrian company and/or it is not subject to a withholding tax (salary tax, capital gains tax, other withholding taxes according to article 99 of the Income Tax Law).

The preconditions regarding the obligation to file a tax return have to be judged exclusively on the base of the national legislation both regarding the type of tax and the amount of tax. In the framework of these procedural questions it is therefore completely irrelevant if pursuant to an applicable double tax avoidance agreement the income is completely or partially tax exempt.

To have a consultation by Alessandro Pasut click here!


Austria: Limited liability companies

The partners holding a majority stake (more than 50%) are obliged to apply for starting insolvency proceedings whenever necessary and the company does not have a managing director. These proceedings are very burdensome because they require e resolution to be passed by the general meeting in order to change the articles of partnership, a registration at the tribunal keeping the commercial register and the notification of creditors.

The minimum corporate income tax amounting to 5% of the registered capital is reduced from yearly 1,750 euro to 500 euro. For existing private limited liability companies the changes have taken place since 1st January 2014. The corporate income tax rate applied is 25% of profits. It is possible to offset the tax due with the sums of minimum corporate income tax paid in previous years.

Regardless of the turnover, also private limited liability companies founded with the reduced amount of registered capital have to apply double entry accounting.

To have a consultation by Alessandro Pasut click here!


Austria: goodwill amortization


Goodwill amortization

With the group taxation regime coming into effect in 2005, the legislator simultaneously introduced a goodwill amortization on share deals in case an Austrian tax group is established. In any case, goodwill is limited to 50% of the acquisition cost and is to be amortized over a period of 15 years.

Claiming goodwill amortization is, however, subject to the following restrictions: shares may not by purchased by another company of the group and/or majority shareholder. The acquired company must form a group with the purchaser and finally the acquired company must be an Austrian company subject to unrestricted taxation exercising an entrepreneurial activity.

Last year in April the Linz independent finance tribunal, referring to the freedom of establishment applied in the EU, extended the scope of goodwill amortization by declaring that it is applicable also to the acquisition of shares of subsidiaries established in the European Union. By doing so, the independent finance tribunal rejected the distinction between Austrian corporations and EU corporations.

To have a consultation by Alessandro Pasut about goodwill amortization in Austria click here


Austria: expected changes to the tax law

Alessandro PasutAUSTRIA

The group taxation scheme provides currently for the possibility of claiming goodwill amortisation for shares acquired in domestic companies which has to be spread over 15 years. Pursuant to the proposed changes, the possibility of goodwill amortisation will be abolished for the acquisition of shares after 28 February 2014. Existing goodwill amortisations will not be affected provided the amortisation had an impact on the determination of the purchase price for the acquired shares.

As of 1 March 2014, the deductibility of interest and royalties paid to related parties resident in low tax countries is limited. The deduction restriction has to be applied if the income derived from the interest and royalties is not taxed in the recipient’s state or is subject to a tax rate of less than 15%. If the applicable tax rate in the recipient’s state amounts to at least 10%, 50% of the interest and royalty expenses will remain deductible.

To have a consultation by Alessandro Pasut on Austria economy click here


Austria: the assessment base in the event of the union of all shares of a company

Regardless of the kind of beneficiary, the triple amount of the appraised value of the property will remain the assessment base in the event of the union of all shares of a company possessing real property in the hands of one person only.

The tax for the transfer of agricultural and forested property will be assessed from the amount of the appraised value. In the case of a transfer of a company without consideration, a tax allowance amounting to 365.000 euro will be applied.

Finally in case of the reorganization of a company the double amount of the appraised value of the property will apply. As of 1 June 2014 the transfer of real property not subject to the Law on company reorganization will not benefit from any relief. Thus especially in case of contributions in kind to a corporation or a partnership consisting in real property, the tax will be calculated on the basis of the current market value.

To have a consultation by Alessandro Pasut on international economy click here.


Austria: Amendment to the real property transfer tax law

In November 2012 the Constitutional Court had stated in a finding that the determination of the real property transfer tax law based on the unitary value is not compatible with the Austrian constitution and declared this method as obsolete. At the same time the Court invited the Government to amend the law by 31 May 2014.

Following up on the Court’s decision the Government has recently published a draft expert opinion pertaining to the Act amending the law on the real property transfer tax. Previously the base for calculating this tax was the consideration (i.e. the sales price). In the event where no consideration was paid, such as in the case of donations, inheritance or contribution of assets to a company, the triple amount of the appraised value of the property was applied.

The new rules envisaged in the Government draft make a distinction between purchase within and outside of families. In the new draft the term “family” has been extended. In the event of purchases without consideration within a family, the tax will be calculated based on the triple appraised value of the property which anyhow can amount only to 30% of its current market value. In the event of a transfer of property without consideration outside a family, from 1 June 2014 the tax will be calculated based on the current market value.

To have a consultation by Alessandro Pasut on international economy click here.


Austria: Expected changes to the tax law

At the end of January the Council of Ministers approved a draft amendment to the tax law. The respective discussion in Parliament should be completed by the end of February.

With reference to the group taxation scheme, the draft states that from 1 March 2014 onwards an Austria tax group will be able to have only foreign corporations as members residing in an EU member state or with comparable corporations in third countries with which Austria has concluded a double taxation treaty or a comprehensive administrative assistance agreement.

Members of the Austrian tax group resident in third countries not meeting these requirements may remain group members until December 2014 and will automatically be excluded from the Austrian tax group on 1 January 2015.
As of 2015, such foreign losses can be offset only up to 75% against the overall income of all domestic group members and the group parent. The remaining current foreign losses have to be added to the tax loss carried forward of the group parent and can be offset against the future group income.

To have a consultation by Alessandro Pasut on international economy click here.


Austria: dividend distributions

Dividend distributions received by an Austrian corporation are tax-free. Capital gains from the alienation of Austrian shares are taxable. If profits are not distributed but instead are retained by the Austrian entity, the fair value of the corporation increases, resulting in higher capital gains upon disposal of the shares.
Up to now, dividends paid out to the (previous) shareholder after a share sale have been regarded as tax-free dividends by the Austrian tax authorities.

According to the revised Corporate Income Tax-Guidelines 2013 recently published by the Ministry of Finance, dividends are only tax-free if the recipient of the dividend is still the owner of the shares as of the date when the respective resolution for the dividend distribution is passed. If, however, the recipient of the dividend has sold the shares before the dividend distribution resolution date, the dividend payment is considered a part of the sales price and, therefore, increases taxable capital gains.

To have a consultation by Alessandro Pasut on international economy click here.Alessandro Pasut