WTS in Austria

In its decision of 23.3.2023, the Austrian Supreme Administrative Court declined the qualification of a Cyprus-based intermediary holding company for a refund of Austrian withholding taxes on dividend payments under the EU Parent Subsidiary Directive.

In September 2023, the Austrian Supreme Administrative Court filed a preliminary ruling request with the European Court of Justice concerning the Austrian investment funds legislation.

In its decision of 23.3.2023 the Austrian Supreme Administrative Court declined the qualification of a Cyprus-based intermediary holding company for a refund of Austrian withholding taxes on dividend payments under the EU Parent Subsidiary Directive.

It is our pleasure to present to you the second edition of our WTS Global Mergers & Acquisitions Newsletter 2023. Presenting updates from 9 countries with a focus on the international M&A industry.

1 March 2023 saw the amended protocol to the double taxation agreement between the United Arab Emirates and Austria enter into force. Whilst the protocol has various implications for residents of Austria, the changes regarding withholding tax on dividends mainly affect residents of the UAE.

The Administrative Court recently decided that an exemption with progression is to be applied to persons with unlimited tax liability in Austria even if they are resident abroad.

In the case of a share deal, a regular focus point is the economic treatment of the distributable profits of the target company.

In a recent case, the Austrian Fiscal Court had to decide whether withholding taxes that cannot be fully credited in the respective tax year can be carried forward to the following years.

Intra-group financing in Austria, alongside the interest rate, a particular strong focus is placed by the tax authorities on whether the debt instrument might be re-qualified into “hidden equity”. Thus, there should be documentation on the capital structure of the borrower, transparency of the loan agreement as well as the arm's length character of the terms and conditions.

Based on the recent decision of the Austrian Financial Court, liability commissions must be charged from the start of the loan agreement, reductions in the Transfer Pricing with respect to deliveries of goods must be credibly demonstrated and the arm's length interest must be charged for supplier credits.

On November 15, 2022 the Austrian Ministry of Finance (MoF) published an information letter on the attribution of dividends for income tax purposes. The letter follows the decision of the Austrian Supreme Administrative Court concerning short-term Cum-Ex-Trades and withholding tax refunds.

As a consequence, input taxes could only be claimed back by using the special VAT refund procedure.

The Austrian Supreme Administrative Court affirmed a claim to interest with respect to input tax surpluses and, by way of legal analogy

On 1 June 2022, the Austrian Ministry of Finance (MoF) issued a statement (EAS 3436), saying that it is changing its understanding of how certain IT services are qualified in the double tax treaty (DTT) with China.

The Austrian tax reform 2022 (Abgabenänderungsgesetz 2022 –AbgÄG 2022) brings various changes to the taxation of investment income.

The new info from May 5, 2022 presents the current legal opinion of the Austrian tax author­ities with regard to bilateral MAP and AP.

In a legal opinion, the “BMF” has explained under which circumstances a permanent establishment is triggered by home office activities.

Uncertainties relating to the determination of the profits attributable to a construction/installation permanent establishment (PE) are a substantial tax-related project risk for companies within the plant construction sector.

The Austrian VAT regulations (§ 3 (8a) VAT Law) give an example of how to correctly handle such distance sales of imported goods, which has been adapted to the customs provisions

Section 4 of the Austrian TP Documentation Law (VPDG) contains a notification obligation in connection with CbCR.

In its decision of 13 January 2021 (Ro 2018/13/0003), the Austrian Supreme Administrative Court decides the question whether a US Trust is eligible for withholding tax refund on Austrian profit distributions.

As part of the Eco-Social Tax Reform 2022 (Ökosoziale Steuerreform 2022), the taxation of cryptocurrencies is included into the existing tax regime for capital assets. The Eco-Social Tax Reform 2022 was passed by the National Council on January 20, 2022 and published in the Federal Law Gazette on February 14, 2022.

Austria is facing new regulatory requirements because of a recent ECJ decision which has led to a new treatment of rental turnover of foreign investors.

At the beginning of November 2021, the Austrian Ministry of Finance published a draft bill on the eco-social tax reform 2022 which includes new rules for the taxation of income from crypto currencies.

On 7 October 2021, the Austrian Federal Ministry of Finance published the final version of the Austrian Transfer Pricing Guidelines (Austrian Guidelines 2021). In 2010, the Austrian tax authorities published the transfer pricing guidelines based on the OECD Guidelines from 2010 for the first time.

The Austrian Federal Court has recently ruled that crypto mining cannot be deemed as an economic activity for VAT purposes.

It remains unclear as to how the taxpayer can successfully request the granting of interest.

VAT exemption for the management of special investment funds – Services provided by a third party – CJEU joined cases C-58/20, K and C-59/20, DBKAG, dated 17 June 2021.

Starting with the 2020 assessment, the Graz City Tax Office has changed its practice and refers to the national refund procedure in the case of filing a 2020 VAT return with zero turnover but declared input tax amounts.

The Austrian Administrative Supreme Court (Verwaltungsgerichtshof) had to deal with a trademark licensing between Malta and Austria. The Austrian trading company MCo had demerged its business and real estate to the Austrian company XCo in 2007. The trademarks stayed with MCo.

In Austria, the draft of the revised Austrian Transfer Pricing Guidelines 2020 was published. Our Austrian colleagues outline the changes and consequences.

Our summary of R&D Incentives provides guidance where such incentives are provided, and who in WTS Global can support you to gain from these incentives for your business or individually the most.

Limitations on the refund of withholding tax on leasing of personnel remunerations

Austria made a U-turn and abolished the wage withholding tax for foreign employers just introduced at the start of last year.

The Austrian tax administration takes a “facts and circumstances-approach” to assess whether home office work creates a permanent establishment (PE) for the foreign employer.

An overview of measures introduced in implementation of the EU directive on tax dispute resolution mechanisms.

As per 01/01/2020, the monthly wage withholding tax obligation is extended.

Section 48 of the Federal Fiscal Code (BAO) allowed for the unilateral elimination of international double taxation

International Tax, Research Premium and Mergers and Acquisitions field expands

Regarding the measures planned for 2019, a bill has been filed in early July 2019 and a decision of the national assembly is expected in September

The relevant regulations that foreign companies have to comply with in Austria are regulated in the “Wage and Social Dumping Control Act”

The monitoring will be evaluated on an ongoing basis and on 31 December 2024 an evaluation report will be presented

The Austrian legislator will also implement the e-commerce package of EU Directive 2017/2455

The Express Answer Service (EAS) offers taxpayers the opportunity to post questions of interpretation regarding international tax matters to the MoF

Since 1.1.2019 applicants for refund of Austrian withholding taxes have been obliged to use an electronic pre-application

From July 1, 2019 the advance ruling must be issued within two months of the application being submitted. 

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Data for every beneficial owner have to be transmitted electronically via the Austrian Government’s Business Service Portal

Shortlisted with another nomination as “Austria Transfer Pricing Firm of the Year“

ICON achieves three nominations and wins the “Allrounder-Upper Austria” award

Austria introduced a gambling levy - The organizers of any lottery now need to pay 5% of the total prize value to the state

The deduction of incidental acquisition costs for private investors is not possible in case the special rate of 27.5 percent is applicable