Pillar Two in Austria – Proclamation of the Minimum Taxation Act

By the end of December 2023, Austria passed the Minimum Taxation Act (“Mindestbesteuerungsgesetz” – “MinBestG”), implementing the global minimum taxation into national law. The MinBestG will be applicable from 31^st December 2023 onwards, with multinational groups and large domestic groups falling within the scope of the new law being subject to an effective tax rate of at least 15% in future. If the effective tax rate calculated on a jurisdictional basis does not reach this threshold, a top-up tax (Income Inclusion Rule/IIR or Undertaxed Profits Rule/UTPR) will be levied. Austria also implemented a Domestic Minimum top-up tax (QDMTT) in line with the requirements of the OECD and EU, which will be imposed on all low-taxes Constituent Entities located in Austria.

Compliance obligations generally apply to each Constituent Entity located in Austria, however, there are options to transfer these obligations to a single Constituent Entity located in Austria or to the foreign UPE or even another designated foreign Constituent Entity if there is a corresponding multi- or bilateral agreement to ensure exchange of information with the foreign state. Violations against the Austrian Minimum Taxation Act will be fined up to EUR 100,000.

In order to relieve groups from the enormous administrative burden and compliance obligations that result from the new rules, Austria also implemented temporary Safe-Harbour regulations (Transitional CbCR Safe-Harbour, UTPR Safe-Harbour) as well as the permanent QDMTT- Safe Harbour and the Simplified Calculation for Non-Material Constituent Entities.

To meet the new challenges associated with the introduction of global minimum taxation, we recommend that affected companies should deal with the issue promptly and should especially check the potential applicability of any Safe-Harbour regulations. In case of further questions or required detailed information about the new Austrian regulations, your contacts at Deloitte are of course happy to assist.