Consequences of the Cum-Ex-Trades on WHT refund and relief in Austria

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 (Verwaltungsgerichtshof – VwGH) of 28 June 2022 (Ro 2022/13/0002) concerning short-term Cum-Ex-Trades and withholding tax refunds. The MoF details under which requirements a shareholder of an Austrian stock listed corporation is entitled to a WHT refund or an exemption at source. 

For tax purposes a dividend shall be attributed to the economic owner of the respective shares on the dividend resolution date. For this purpose, the acquired shares must have been deposited in the taxpayer's (the customer's) securities account prior to the day on which the resolution on the distribution of profits is adopted (Annual General Meeting); the relevant date is therefore the securities account balance at the end of the day preceding the Annual General Meeting (AGM day minus one). The date of deposit is generally the date on which the purchase order is executed. Therefore, if the acquired shares were not deposited in the securities account at the latest at the end of the last trading day before the Annual General Meeting (AGM day minus one), it must be assumed that the seller of the shares still has beneficial ownership.

The MoF expressly states that a refund request will have to be substantiated by documentation detailing the above requirements. Proof of the date of deposit must be provided by means of corresponding bank confirmations (in particular annual custody account statements that contain additions and disposals comparable to a journal), whereby the tax office reserves the right to verify their authenticity (also by way of administrative assistance) or to request further documents.

If, in the past, WHT was refunded on the basis of the securities account balance at the end of the cum date, this refund can be cancelled and remitted within a one-year period from the date of delivery of the notification about the refund. In all other cases, a cancellation of previous  WHT refunds can only be made where the requirements for a reopening are met. This would be the case where the competent tax authority, at the time of issuing the notice, had no knowledge of whether the applicant was the beneficial owner of the shares on the day of the resolution on the distribution of profits (Annual General Meeting) and thus the subject of the dividend payment and the debtor of the WHT refunded.

Based on above mentioned VwGH-jurisprudence, the WHT exemption at source must also be based on the beneficial ownership on the dividend resolution date. If the distributing company cannot prove that the requirements for relief were met at the latest at the end of the last trading day prior to the Annual General Meeting, it will be liable for WHT not levied. 

If you wish to discuss this topic, please contact: ICON, Linz

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