Tax & Legal News in English | March

Austrian Private Foundation: Establishment of an Advisory Board

The Austrian Supreme Court has recently specified the legal requirements for the establishment of an advisory board in an Austrian private foundation. Accordingly, the declaration of foundation must (i) provide for the establishment of an advisory board as a body of the private foundation and (ii) contain a specific allocation of competences to the advisory board. Linking the competences of the advisory board to a vague conversion clause (“Wandlungsklausel”) prevents – due to the indefiniteness of the allocation of competences to the advisory board – the effective establishment of an advisory board. Therefore, special diligence must be taken when drafting the competence catalog of the advisory board (as well as a possible conversion clause) in the declaration of foundation. 

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Wage tax and social security aspects of the granting of bicycles by the employer

At a time of increasing environmental awareness and a stronger focus on ensuring the well-being of employees, the use of (electric) bikes for work purposes is increasingly coming into the spotlight. More and more employers are turning to company bicycles as an alternative mobility solution for their employees. In response to an inquiry, the Ministry of Finance has now clarified the treatment of so-called salary conversions under income tax law. Following this clarification, the Austrian social security agency then shared its legal opinion concerning social security contributions which are largely consistent with the opinion of the  Ministry of Finance. The clarifications now issued can provide legal certainty in the area of income taxes social security contributions with regard to wage conversions. 

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CJEU: Obligation to inform other intermediaries infringes fundamental rights

The decision of the CJEU Orde van Vlaamse Balies et al. is positively surprising in many respects and is in any case considered groundbreaking. It has now been clarified that not only legal defense activities, but also legal advice, both with regard to its content and its existence, is protected by the EU fundamental rights. Although the decision explicitly refers to lawyers, there are very good reasons for the CJEU's statements to also apply to other legal advisors such as tax advisors, who are also of integral importance for the functioning of the rule of law.

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ECJ: Void clauses in general terms and conditions can prevent entrepreneurs from claiming damages

Following a request for a preliminary ruling from the Austrian Supreme Court , the ECJ has issued a ruling (ECJ 8.12.2022, C-625/21) with respect to the question of the impact on the use of unfair terms in general terms and conditions (GTC). The damage clause at hand contained two variants, one of which was deemed unfair and one of which corresponded to the dispositive damage provision under Austrian law. According to the ECJ’s ruling, the respective clause is declared void as a whole regardless of the fact that one of the variants provided therein corresponds to the dispositive damage provision under Austrian law. Based on this, the ECJ ruled that entrepreneurs cannot invoke dispositive law after the removal of an unfair damages clause in GTCs and claim damages from consumers based on such statutory law, provided that the underlying contract can remain in force despite the removal of the unfair clause. Thus, in such cases entrepreneurs are not compensated for their damages - even in the case of unjustified withdrawal by consumers - and are left empty-handed.

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Extension of energy cost subsidy no. 1: pre-registration is expected to start on 29 March 2023

The energy cost subsidy no. 1 already supported energy-intensive companies with the subsidy of the additional costs of electricity, natural gas and fuel in the period from February to September 2022. Due to the continuing sharp increase in energy prices, within the framework of the amendments to the legal basis on 24 February 2023, the funding period for the energy cost subsidy no. 1 has now officially been extended to Q4 2022. Moreover, an energy cost subsidy no. 2 has been newly introduced in order to tackle the additional energy costs in the entire year 2023. You can find detailed information on this in our December newsletter: Christmas present to Austrian (energy-intense) companies by the federal government: Energy cost subsidy will be prolonged and funding criteria expanded! | Deloitte Österreich

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W&I-Insurances: Overview and Austrian tax implications

W&I insurances have increasingly become observable market practice in in Austrian M&A transactions. This article aims to provide an overview of the content and background of such insurance policies and their underlying tax implications. In this context, it has to be stated that there is currently no Austrian jurisprudence or other guidance from the tax authorities dealing with the question whether W&I insurance premiums are deductible for Austrian income tax purposes. The same goes for the question of whether payments received by the W&I-insurance would form part of the taxable income of the receiving entity. 

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

On 16 March 2023, the Austrian Ministry of Finance published once again a new 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 3 February 2023.

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 16 March 2023, which provides for a further 0.50% increase in the prime interest rate, results in the following interest rates effective as of 22 March 2023.

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EAS 3440: No step-up in the case of relocation and subsequent sale of a British real estate

In the present EAS legal information, the Austrian Federal Ministry of Finance had to deal with the question of whether Austria can claim the right to tax the entire capital gain from a private sale of real estate (or only the capital gain since the relocation of the taxpayer) based on the double taxation agreement with the United Kingdom (DTA-GB). The Federal Ministry of Finance confirms the already known legal opinion, according to which the state of residence should be entitled to tax the entire capital gain. This is based on the argument that the applicable DTA-GB provides for the right of taxation for the state of residence and thus creates the corresponding legal framework without ultimately leading to double taxation. A so-called step-up, i.e. taxation at the fair market value at the time of the relocation, is thus still only to be assumed in the case of business property or certain capital income and precisely not in the case of private real estate sales.

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Wage tax and social security aspects of granting charging costs as employer

Increasing environmental awareness leads to an increased use of e-mobility as an alternative mobility solution for employees. In response to an inquiry, the Federal Ministry of Finance has now clarified the treatment of charging costs and salary conversions under income tax law. This clarification now issued by BMF can provide legal certainty in the area of income taxes and social security contributions regarding wage conversions and charging costs.

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Deadline for tax returns 2021 extended until 30 September 2023!

The deadline for electronically filed annual tax returns generally ends on 30 June of the following year. In cases where taxpayers are represented by a tax advisor (so-called “Quotenvertreter:innen), the deadline is extended until 31 March of the second following year, whereby a grace period of one month is generally granted each year. Therefore, the tax returns usually have to be filed by 30 April of the second following year.

With the decree of the Ministry of Finance from 22 March 2023, the grace period for the submission of the tax returns for 2021 was extended from one to six months under the quota system. This is due to the still existing backlog resulting from the COVID-19 pandemic.

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Tax Deadlines in April 2023

On 17.4.2023 the following declarations/payments are due:

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

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