Tax & Legal News in English | September 2022

Tax Appeals Court ruled on admissibility of horizontal groups

In its recent decision of 31 March 2022 (RV/7104573/2020) the Tax Appeals Court ruled that, contrary to the previous legal situation, a corporate group within the meaning of sec 9 CITA is also permissible between domestic subsidiaries with a foreign parent company (without a domestic branch). This also allows the option of a horizontal pooling of results between the (domestic) sister companies within the group.

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Privately owned Photovoltaic system affects material interests of condominium owners

The installation of a private photovoltaic system on the roof of a condominium-building runs contrary to material interests of the other owners if it renders the installation of a communal system impossible.

Any desired modification of the condominium-building is prohibited if the modification substantially impairs interests of other condominium owners at the sole advantage of one owner. In this case, a condominium owner wanted to erect a photovoltaic system on the roof. The system was supposed to take up 80% of the roof area, merely leaving a small area for any additional photovoltaic systems. Consequently, the courts rejected the installation of the privately owned system as it would constitute a significant unequal treatment of the condominium owners and thus an impairment of their material interests.

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New Covered-Bonds-Act

The EU Directive on Covered-Bonds has been transposed into Austrian law with the new Covered-Bonds-Act (Pfandbriefgesetz) and entered into force on 8 July 2022. The new law creates a uniform legal basis for covered bonds in order to promote the attractiveness of the Austrian market for covered bonds and increase investor protection.

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Implementation of a VAT interest rate regulation

Until now, the Austrian Federal Tax Code (BAO) did not provide for an independent interest rate regulation regarding VAT. In order to comply with EU law requirements and to preserve the principle of tax neutrality, the Austrian Tax Amendment Act 2022 (AbgÄG 2022) implemented a new provision for an interest rate regulation, which applies exclusively to VAT (Section 205c BAO), with the interest rate being 2% above the base interest rate. Interest periods last generally from the 91^st day after claiming a VAT credit in a monthly/quarterly VAT return or after a payable becomes due until payment on the tax account. Different periods apply for annual VAT returns.

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Deadline for input VAT refunds 2021 in EU Member States ends on 30.9.2022

Austrian entrepreneurs who have been charged foreign VAT for supplies or services from their EU suppliers can submit an input VAT refund application until 30 September 2022. These refund applications regarding input VAT from other Member States must be submitted via FinanzOnline in Austria. The information required to complete the form must be uploaded manually (i.e., on a line-by-line basis) or by uploading XML files. A maximum of 40 invoices per refund claim can be filed in a manual upload. Claims that have more than 40 invoices must be uploaded through XML files to be created via specific software.

We will be pleased to assist you with the preparation and filing of your input VAT refund for 2021. Deloitte has the specific software to ensure the possibility to upload more than 40 invoices per refund claim. Please do not hesitate to contact us in case our assistance is required.

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Triangular transaction: VAT Registration in country of destination harmless

The simplification rule regarding triangular transactions is also applicable in case the middle man/intermediary is registered for VAT purposes in the country of destination (but not resident) and uses the VAT ID number of another Member State.

This ruling is contrary to the view of the Austrian tax authorities (margin no. 4294 VAT guidelines). However, it can be assumed that the view of the Administrative High Court will be adopted by the tax authorities in an upcoming maintenance decree.

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Customs and Fiscal Penal Law: Extension of cash regulation

The EU-regulation regarding controls on cash entering or leaving the Union includes the obligation for individuals to declare cash in the amount of EUR 10,000 or more if they are entering or leaving the EU. A new EU-regulation entered into force in June 2021 with which the definition of cash has been expanded. Additionally, unaccompanied cash entering or leaving the EU has to be disclosed as well, if it is requested by the customs authority. For the sanctioning of the new obligations, the accompanying paragraph in the Fiscal Penal Law Act was expanded. The threatened fine remained unchanged.

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Excise tax amendment in Austria in force since 1.1.2022

With the implementation of the new EU excise tax regulations, especially the Excise System Directive, into national law, the excise tax acts in Austria were amended and a new federal law on excise duties on beer and other alcoholic beverages (Beer Tax Act 2022) was enacted. The Austrian Sparkling Wine Tax Act was repealed as of 31 December 2021 and the scope of the Beer Tax Act 2022 was extended to include certain other alcoholic beverages (intermediate products, wine and sparkling wine). The amended excise tax acts are already applicable and entered into force on 1.1.2022. The main effect of the amendment is the future applicability of EMCS also for intra-Community movements of excisable goods released for consumption as of February 2023.

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Inflation adjustment of income tax brackets: Government proposal introduced

The legislative process to adjust income tax provision for inflation is taking its next significant step: on 14 September 2022, a government bill (“Inflation Relief Pact, Part II") was introduced. Centerpiece of the bill is an inflation-adjustment of income tax brackets for 2023 and the introduction of an “automatic” inflation adjustment mechanism, to be applied from 2024 onwards. The legislative process needs to be awaited.*

*Note from the Editorial Team: During the legislative process no amendments were made. The law entered into force as reported. 

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Application of the difference method for uniform remuneration

The waiver of a prohibition of alienation and encumbrance against payment leads to other income from benefits. The waiver of a right of usufruct against payment does basically not lead to other income from benefits. If a uniform remuneration is paid for two different legal assets with different legal treatment (like in this case for the right of usufruct and for the wavier of alienation and encumbrance prohibition), an apportionment is required according to objective standards. In the present case, the Administrative High Court opted for the difference method, under which the fair market value of one legal asset is determined and the other legal asset is allocated a consideration in the amount of the difference between the total price and the determined fair market value of the one legal asset.

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Bonus against Inflation –Tax exemption for so called “Teuerungsprämie”

The Parliament recently passed a new tax bill which introduced another incentive for employers to grant a bonus payment (“Teuerungsprämie”) to employees for support against inflation. The new bonus payment is tax free as well as exempt from social security contributions and wage related taxes for up to EUR 3.000. However, the tax exemption cannot be applied to existing bonuses, but rather requires an additional bonus. When implemented, a focus should be put on how the new Teuerungsprämie is combined with other recently introduced tax exemptions, such as the new “Mitarbeitergewinnbeteiligung”, as the EUR 3.000 threshold applies to both bonus tax benefits combined. Also a retroactive switch of an existing “Mitarbeitergewinnbeteiligung” into a “Teuerungsprämie” might be beneficial, whereas this should be carefully analyzed on a case-ny-case-basis. Please contact your Deloitte tax advisor for further questions.

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Suspension of information exchange with Russia and Belarus

The (temporary) suspension of the exchange of information with Russia and Belarus is, in the opinion of the Austrian MoF (MoF-information as of 18 July 2022), in principle not detrimental to the existence of “comprehensive” administrative assistance with these states, even after their inclusion in the MoF list of states. The prerequisite with regard to “comprehensive” administrative assistance for claiming income tax benefits under Sec 2 Para 8 Item 4 ITA, Sec 9 Para 2 CITA and Sec 10 Para 1 Item 6 CITA, therefore, continues to be met. For income from capital investment through (accrued) interests generated by taxpayers resident in Russia or Belarus, the exemption from WHT existing under national regulations no longer applies due to the absence of the explicitly required “automatic” exchange of information. As a result, credit institutions subject to withholding obligations must generally withhold capital gains tax on this gross income as of 1 January 2023. A relief from the Austrian WHT should, however, be possible for the two states due to the provisions under the respective tax treaty regulations.

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Federal government agrees on details of funding guidelines for energy cost grant

Energy-intense companies with an operating site in Austria can look forward to a grant of already up to EUR 400,000 in the first stage of the energy cost grant program, with grants of up to EUR 50,000,000 per company possible for particularly heavy affected sectors and cases. Pre-registrations will be possible from mid/end of October, the formal applications starting from mid-November. Despite the announcement of the details of the grant guidelines, their final publication after final approval by the respective institutions has to be awaited. In addition to the energy cost grant, a separate flat-rate grant model is to be implemented for small enterprises on the basis of the UEZG, under which grants of up to a maximum of EUR 1,800 shall be possible.

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