Posted: 27 Oct. 2021 6 min. read

THE AUSTRIAN TRANSFER PRICING GUIDELINES 2021

Overview

On 7 October 2021, the Austrian tax authorities published the highly anticipated Austrian Transfer Pricing Guidelines 2021 (Austrian TPG 2021). The Austrian TPG 2021 serve as an interpretative aid to the international arm's length principle and are intended to ensure its uniform application. Essentially, they incorporate the current OECD Transfer Pricing Guidelines 2017 (OECD TPG 2017), which have been supplemented with special features of Austrian tax law. For this reason, the Austrian TPG 2021 are not only important for the Austrian tax authorities but they are also a valuable reference work in business practice – despite the fact that they are not legally binding. In our series of articles on the new Austrian TPG 2021, we will provide a deeper insight into the main changes that have been made. In advance, we would like to provide a brief overview of the significant amendments in the Austrian TPG 2021.

Background

In 2010, the Austrian tax authorities published the Austrian TPG 2010 for the first time, which were based on the then current OECD TPG 2010. Since then, the OECD TPG have been amended extensively in particular with the OECD's Base Erosion and Profit Shifting (BEPS) project and were republished in their current version in 2017. Accordingly, there was a need to revise the Austrian TPG to take account of these international developments.

The basic structure of the new Austrian TPG 2021 largely follows that of the Austrian TPG 2010, although considerable additions have been made in some places. On top of that, the most important information and EAS (Express Answer Service) of the Austrian tax authorities relevant for transfer pricing purposes have been incorporated.

Overview of the amendments

Significant amendments compared to the previous version of the Austrian TPG can be found in the area of

  • the five comparability factors (in particular, inclusion of the concept of control over risk in the functional analysis; remarks on the consideration of location specific advantages and group synergies and on the application of year-end adjustments);
  • the selection and application of the most appropriate transfer pricing method (in particular with regard to the transactional profit split method);
  • intra-group services (in particular with regard to the arm's length mark-up on routine services; simplified approach for the determination of arm’s length charges for low value-adding intra-group services [LVAIGS approach of the OECD TPG 2017]);
  • financial transactions (adjustments to the OECD TPG 2017 in the areas of lending, cash pooling, guarantees and captive insurance);
  • intangibles (especially implementation of the DEMPE concept of the OECD TPG 2017 and the approach for the valuation of hard-to-value intangibles [HTVI approach of the OECD TPG 2017]);
  • cost contribution arrangements (primarily valuation of participants' contributions at arm’s length; in limited cases, only allocation of costs is still possible);
  • permanent establishments (changes to the establishment of and profit attribution to construction permanent establishments as well as agency permanent establishments);
  • documentation requirements (especially for business units that do not exceed the thresholds of the Austrian law on Transfer Pricing Documentation);

Conclusion and outlook

With the revisions made, the Austrian TPG have been aligned with the current status of the OECD TPG 2017. In the future, it can be expected that the Austrian tax authorities will revise the Austrian TPG more frequently and not wait a decade for an update, as it was the case previously – especially because of the current rapid developments in international tax law, which are also expected to result in extensive changes in the area of transfer pricing. 


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Dr. Florian Navisotschnigg, BSc (WU)

Dr. Florian Navisotschnigg, BSc (WU)

Senior Assistant Steuerberatung

Florian Navisotschnigg ist in der Steuerberatung im Transfer Pricing Team bei Deloitte Wien beschäftigt. Dabei berät er multinationale Unternehmen bei verrechnungspreisspezifischen Fragestellungen.