Tax & Legal News in English | February

Electric cars as company cars 

As of 1 January 2023, new regulations about the recognition of remuneration in kind for electric cars and the charging of electric cars apply. Thus, for example, a non-cash benefit value of zero is now to be applied to electric cars that are not owned by the employer and can be charged free of charge at the employer's premises. In addition, the employer's reimbursement of the acquisition costs of a charging device for the employee is tax-free up to EUR 2,000.00. And finally, the employer is entitled to a cost reimbursement of 22.247 cents/kilowatt hour for the reimbursement of charging costs for an employer-owned electric car for the calendar year 2023.

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Case law: Right of usufruct and income attribution for minors

Income resulting from a right of usufruct can only be attributed to the beneficiaries of the right of usufruct if they show sufficient entrepreneurial initiative. For this purpose, the beneficiaries must be able to influence the generation of income and also bear the burdens associated with the source of income. When assessing the existence of entrepreneurial initiative, no distinction is made between minors and adults. 

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Hidden profit distribution even without distributable profit

The Administrative High Court ruled that the absence of a distributable profit and, at the same time, the existence of sufficient shareholder`s contributions do not proof a tax-neutral capital repayment. The proof is provided only by a proper documentation on the evidence account for tax purposes and the timely submission of a capital income tax return until the end of the respective fiscal year at the latest. The necessary documentation requirements should therefore be checked before the end of the respective financial statement date. Otherwise, in case of doubt the tax office will assume a profit distribution, which is subject to capital income tax in case of a hidden distributions of profits. 

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Austrian Ministry of Finance: Further adjustment of interest rates per 0.50%

On 3 February 2023, the Austrian Ministry of Finance published a decree on the adjustment of rates for deferral interest, interest on arrears (“Anspruchszinsen”), interest for suspension (“Aussetzungszinsen”), interest for appeal (“Beschwerdezinsen”), and VAT interest. This decree replaces the decree of 16 December 2022.

The rates for deferral interest, interest on arrears (“Anspruchszinsen”), interest for suspension (“Aussetzungszinsen”), interest for appeal (“Beschwerdezinsen”), and VAT interest depend on the applicable prime interest rate (Sec 212 para 2, 212a para 9, 205 para 2, 205a para 4, 205c para 5 Austrian Federal Fiscal Code).

Pursuant to Section 1 of the Base and Reference Rate Ordinance, the prime rate changes in accordance with the interest rate applied by the European Central Bank to its main refinancing operations.

The decision of the Governing Council of the ECB of 2 February 2023, which provides for a further 0.50% increase in the prime interest rate, results in the following interest rates effective as of 8 February 2023.

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Update case law real estate income tax

In its decision from 18 July 2022 the Tax Appeals Court ruled that since the compensation for damage has nothing to do with the sold asset "real estate", it does not reduce the proceeds from the sale. The compensation payment is a pecuniary loss in the private sphere of the seller, which is not attributable to any asset and is therefore irrelevant for tax purposes.

The Administrative High Court ruled in its decision from 16 November 2021 that a mixed gift is deemed to exist in the event of a manifest disproportion between service and consideration if the relationship between the persons leads to the assumption that they intended to conclude a contract partly for consideration and partly free of charge. The assessment of mixed gifts must therefore be based on whether the parties subjectively intended to conclude a (partially) gratuitous legal transaction. As a rule, a legal transaction for monetary consideration is to be assumed if the value of the compensation does not deviate by more than 25% from the value of the asset. 

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BFG: Self-use of a flat in case of a co-ownership

If an apartment in a co-owned property is used by a co-owner for their own residential purposes, it must generally be assumed that the use of the apartment is not relevant for tax purposes. As a result, the rental income, including any input taxes and income-related expenses claimed, must be adjusted by the share of owner-occupied use. However, if the area used by one co-owner for his:her own purposes exceeds the co-ownership share, the rental income can be recognized proportionately by the remaining co-owners.

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Money laundering with crypto assets?

European Union sets out to control with a new comprehensive money laundering package

With the 5^th Money Laundering Directive, the European Union has created a definition of virtual currencies and imposed money laundering obligations on service providers regarding virtual currencies, as it is also known from the banking sector. However, it is also undisputed that this alone cannot put a stop to the wild west behavior of cryptos. Therefore, the European Union has already launched a comprehensive regulation for the regulation of crypto assets, known as “MiCA”, which is expected to come into force soon.

As part of a new EU anti-money laundering package, the anti-money laundering provisions for crypto-assets are now to be extended and tightened. In the future, all providers of crypto services are to be obliged to comply with due diligence obligations regarding their customers and to verify information provided by their customers.

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Social-security coverage regarding cross-border home-office activities in Germany and Czech Republic

The Austrian authorities met an agreement with both Germany and the Czech Republic that for cross-border home-office activities, employees can spend up to 40% of the working time in the home-office without a change of the social security coverage to their residence country. While the agreement with Germany is already effective, the one with the Czech Republic shall become effective as of March 2023. Due to the Covid-19 transitional regulations, there is currently no change of the social security coverage to the residence country results, due to Covid-19 related extensive home-office activities. Those Covid-19 transitional regulations determine that no change of the social security coverage results due to the Covid-19 measures. Since those transitional regulations only are applicable until end of June 2023, it was not clear how the extensive cross border home-office will impact the social security coverage. The new agreements between Austria and Germany and Austria and the Czech Republic allow legal certainty for the social security coverage of home-office activities between Austria and Germany as well as the Czech Republic. The agreements, upon application, allow employees to spend up to 40% of the working time in the home-office in the residence state without a change of the social security coverage to the residence country. For the future, it is intended to close further agreements with the remaining neighbor states of Austria to allow 40% of home-office activities for those cases as well without a change of the social security affiliation. 

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EU Public CbCR: Implications of the implementation in Romania from 2023 for Austrian corporate groups

The Public CbCR - introduced with an amendment to the EU Accounting Directive implemented in 2021 - is intended to provide increased transparency with regard to financial and tax data of multinational companies with a high turnover and with a link to the EU. While other countries that have already enacted the Directive into national law or have published drafts for the implementation have opted for the latest possible implementation date (therefore the publication of the Public CbCR as of the beginning of the first fiscal year starting on or after 22.6.2024), the provisions in Romania apply already for fiscal years starting on or after 1.1.2023). Even though this is a national, Romanian regulation, it potentially has implications also for Austrian groups of companies.

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Merger: Applicability of Sec 9 para 5 CITA

The application of Sec 9 para 5 CITA in case of a merger requires that the transferring group member and its assets belong to the group without interruption. In the decision dated19 October 2022, Ro 2022/15/0032, the Administrative High Court confirmed that a seamless group membership of the transferring and acquiring entity in case of a merger is sufficient to meet this requirement. An overlapping group membership is not necessary. However, it is required that a financial connection between the receiving entity of the merger and the group parent must already exist prior to the merger. 

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Tax Deadlines in March 2023

• Intrastat-declaration for February 2023.
• Advance VAT declaration for January 2023.
• Standardized Consumption Tax for January 2023.
• Capital Gains Tax for capital gains on debt securities for January 2023.
• Tax on energy, coal and natural gas for January 2023.

For an overview of all Tax Deadlines in March click here...