Pillar Two: Draft legislation on the implementation of the global minimum taxation in Austria under review

After the EU Finance Ministers had already agreed on the Directive on Ensuring a Global Minimum Taxation for Multinational Groups of Companies and Large Domestic Groups in the Union in December of the previous year, thus deciding on the implementation of Pillar Two (see also our Tax & Legal News of 13.12.2022), the legal regulation for the national implementation of the Global Minimum Taxation in Austria is now under review.

The Global Minimum Taxation is intended to ensure that (multi-)national groups of companies with consolidated revenues of at least EUR 750 million are subject to an effective tax burden of at least 15% worldwide. According to the Austrian Minister of Finance, Mr Brunner, the global minimum tax is intended to ensure tax justice and strengthen Austria as a business location. The Ministry of Finance assumes an additional tax revenue for Austria of around EUR 100 million per year.

The new Minimum Taxation Act at a glance

The global minimum taxation is implemented in Austria with its own law, the Minimum Taxation Act (Mindestbesteuerungsgesetz, MinBestG). The MinBestG is essentially based on the corresponding EU Directive, but also takes into account the explanations and Agreed Administrative Guidance published by the OECD. If the effective tax rate calculated in accordance with the regulations for a tax jurisdiction falls below the minimum tax rate of 15%, there is low taxation within the meaning of the MinBestG and a supplementary tax is to be levied by means of an Income Inclusion Rule, IIR, or Undertaxed Profits Rule, UTPR. In addition, a Qualified Domestic Minimum Top-Up Tax, QDMTT, is also envisaged, which is to be applied to all domestic business units of a group of companies that are in scope. In principle, the QDMTT and the IIR are to be determined on the basis of the Group Accounting Standard. The introduction of a national supplementary tax for foreign business units of a group of companies is reserved for foreign jurisdictions.

In accordance with the current draft of the MinBestG, Austria will also largely implement the permanent and temporary safe harbour regulations that have been agreed internationally so far, in order to spare groups of companies the complex, detailed and time-consuming calculation of the supplementary tax in certain cases, especially in the initial phase. In addition to the temporary CbCR  Safe Harbour regulations (see also our Tax & Legal News of 17.05.2023),  this also includes, for example, a so-called QDMTT Safe Harbour: if a foreign tax jurisdiction provides for a Qualified Domestic Minimum Top-Up Tax and this meets the requirements defined by the OECD, a detailed calculation in accordance with the GloBE regulations for business units in this tax jurisdiction by the top business unit is no longer necessary, as the supplementary tax amount is reduced to zero for IIR and UTPR purposes.

The levying of the minimum tax is in the responsibility of the tax office for large businesses and is designed as a self-assessment levy, i.e., the taxpayer has to submit an advance return, calculate the resulting minimum tax himself and pay it. Furthermore, according to the draft of the MinBestG, every business unit located in Austria is in principle obliged to submit a minimum tax report ("GloBE Information Return", “GIR”), which must contain information on the calculation of the effective tax rate, the amount of supplementary tax and the options exercised. However, the submission of the GIR may also be carried out centrally by a single business unit located in Austria or by the foreign supreme parent company or another foreign business unit designated as subject to the reporting obligation for the entire group of companies, provided that an exchange of the annual GIR with the foreign state concerned is possible on the basis of a corresponding multilateral or bilateral agreement.

Finally, a minimum tax arising on the basis of the MinBestG – consisting of QDMTT, IIR or UTPR – is owed by only one domestic business unit for the entire group of companies, whereby a specific order of precedence is defined in the draft legislation. All domestic business entities are liable for the entire minimum tax. For this purpose, the business unit liable to pay may, in accordance with the requirements of company law, demand (tax-neutral) compensation from the other business units for the minimum tax paid by it. In particular, this is intended to facilitate the administration of the regulations both at the level of the groups of companies and at the level of the tax authorities.

If obligations under the MinBestG are intentionally violated, such as the fact that the GIR is not submitted, not submitted in full or not on time, a fine of up to EUR 100,000 may be imposed. In the case of gross negligence, such financial offences are punishable by a fine of up to EUR 50,000 euros.

The new Minimum Taxation Act (MinBestG) is to come into force on 31.12.2023 and will be applicable for the first time to financial years beginning on or after 31.12.2023. This applies in particular to the regulations on the QDMTT and IIR. The application of the UTPR, however, is only envisaged to apply for financial years beginning on or after 31.12.2024.

Result

The review period for the Minimum Taxation Act (MinBestG) ends on 20.10.2023. In accordance with the underlying EU directive, the national implementation must then take place by the end of the year. Given the shortness of the review period, material changes are probably no longer to be expected.

Affected groups of companies should promptly deal with the transposition and implementation of the Global Minimum Taxation and, in particular, already check the applicability of the Safe Harbour regulations. To help you comply with the new tax regulations, we would also like to introduce you to our new Global Pillar Two Legislative Tracker .

If you have any questions about the individual regulations in detail as well as further questions about the impact analysis and implementation in your company, your contacts at Deloitte will of course be happy to help.