Austria: The expanded Advance Tax Ruling Procedure

In accordance with Section 118 of the Federal Tax Code (BAO), the responsible tax office must – upon receipt of a written application and through an ‘advance ruling’ – pronounce its judgment on tax assessment of a particular situation that had not yet materialized at the time of the application if there is a particular interest in view of considerable tax ramifications.

Since the introduction of the advance tax ruling procedure in Austria (unilateral ‘advance ruling’) on January 1, 2011, the subject matter covered by advance rulings has consisted of legal matters pertaining to reorganization, corporate groups and transfer prices. The Annual Tax Act of 2018 (Jahressteuergesetz 2018) stipulates that from January 1, 2019, this will be extended to include legal questions pertaining to international tax law, VAT law and cases of misuse.

The application must describe the situation that has not yet materialized, explain the particular interest of the applicant in formulating the specific legal questions, present a detailed legal opinion on the legal questions formulated, and contain information on the amount of the contribution to administrative costs (in particular on the amount of revenue and group membership). Such an interest should generally be recognized in legal matters relating to reorganization, groups of companies and transfer pricing. There may also be special interests on which the Austrian tax authorities have already expressed their position.

The advance tax ruling has binding force for the Austrian tax authorities if the situation that materialized does not deviate or only deviates insignificantly from that on which the advance ruling was based. There is no binding effect that might be detrimental to the party. The binding force of this ruling is not negated by changes in case law or by decrees issued by the Federal Ministry of Finance.

Pursuant to Section 118 Para. 5a of the Federal Tax Code, as amended by the Annual Tax Act 2018, from July 1, 2019 the advance ruling must be issued – ‘if possible’ – within two months of the application being submitted. However, the explanation of this requirement qualifies this statement by noting that the deadline can be extended – for example due to the complexity of the enquiry.

The legal and planning certainty to be achieved through advanced rulings is subject to a charge. Depending on revenue or group affiliation, a ‘contribution to administrative costs’ of between EUR 1,500 and EUR 20,000 must be paid. This contribution is based on an application concerning a specific situation.

As early as March 2, 2011 the Austrian Ministry of Finance issued guidelines on advance rulings (advance rulings pursuant to Section 118 of the Federal Tax Code), which can be accessed HERE in German.