Tax & Legal News in English | June

Pillar Two: Global minimum taxation and corporate restructurings

As a result of the implementation of the Minimum Taxation Act in Austria, the consequences for Pillar Two purposes need to be considered in addition to the effects under national tax law and (AT) GAAP when carrying out corporate restructurings. Of particular relevance here is in a first step the assessment of whether the reorganization is a restructuring within the meaning of the Minimum Taxation Act. Only if this is the case, a tax-neutral reorganization for the purposes of the global minimum taxation would be possible.

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Relocation costs and moving expenses in Austrian payroll accounting and in the employee’s Austrian income tax return

The modern world of work requires mobility and flexibility in terms of the workplace, which may require a move within a country or even across the border. Depending on agreements between employee and employer, relocation costs can be borne by the latter. This brings up the questions of the treatment of these costs in both, Austrian payroll and the Austrian personal income tax return of the employee. In payroll, certain payroll tax exemptions may apply to specific relocation costs. In case the employer does not reimburse relocation costs, or the exemptions do not apply in payroll, relocation costs maybe be deducted in the personal income tax return of the employee if specific requirements are met. In both cases, as a rule, it is required that the previous place of residence has been given up.

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Action required for Pillar Two Groups with constituent entities in Belgium

We would like to draw your attention to information shared by Deloitte Belgium, according to which guidance pertaining to the application of the Pillar Two rules in Belgium was published on 29 May 2024. The guidance creates additional compliance obligations for the MNE Groups in scope having constituent entities in Belgium, for which due to short filing deadlines immediate action is required.

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Germany: new regulations for financial transactions

The introduction of Section 1 3d) and 3e) signals a shift away from OECD principles and best practices, which will lead to more disputes in tax audits. Taxpayers will increasingly have to provide evidence due to rebuttable presumptions of the German law, which will lead to higher documentation costs and increased disputes.

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Stamp duty exemption for hotel lease agreements

In its recent decision of 29 November 2023 (RV/7104160/2019), the Tax Appeals Court (BFG) ruled that also for hotel lease agreements the stamp duty exemption for residential rents applies. The qualification as residential lease depends on the purpose of the leased property. A need for residence on the part of the tenant himself is not required, a residential purpose for hotel guests is sufficient. It remains to be seen how the Administrative High Court (VwGH) will finally decide in this case. 

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Update: No stamp duty exemption for hotel lease agreements

In its recent decision of 14 May 2024 (Ro 2024/16/0004), the Administrative High Court (VwGH) ruled, in contradiction to the previous ruling of the Tax Appeals Court (BFG), that the stamp duty exemption for residential rents does not apply to hotel lease agreements. The objective purpose of hotel facilities is not to satisfy residential purposes, but to provide the commercial service of accommodation. Therefore, hotel lease agreements are not to be equated with residential rents for the purpose of the stamp duty. 

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Administrative High Court on the place of management of a foreign company

Corporate services provided by a domestic managing director of a foreign company do not necessarily constitute the place of management of the foreign company. According to the case law of the Administrative High Court, the place of management rather results from the respective actual organization of circumstances. Similarly, activities of a preparatory nature or auxiliary activities do not fulfil the criteria for establishing a permanent establishment respectively fixed establishment of business. Home office activities or field service activities in Austria do not per se constitute a place of management or a permanent establishment respectively fixed establishment of business.

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Immediate KESt relief only if the ZS-QU forms are submitted promptly?

The Tax Appeals Court decided that in order to be eligible for a WHT reduction at source, a foreign certificate of residence on Austrian forms (for legal entities ZS-QU2) has to be obtained within one year before or after WHT would have to be paid in order to be regarded as in time. Providing a foreign certificate of residence or a certificate of residence only years later is not sufficient.

Based on consultation agreements the Austrian tax authorities accept certificates of residence not using the Austrian forms only from very specific countries. 

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Working in homeoffice becomes teleworking: what's changing?

The new Teleworking Act (Telearbeitsgesetz) is expected to enter into force in January 2025. This is intended to make the choice of the place of work even more flexible for employees.

Telework within the meaning of the legal definition is deemed to exist if the employee regularly performs the work, in particular using the necessary information and communication technology, at home or at a location chosen by the employee that does not belong to the employer's company. In addition to the main or secondary residence and the residence of family members, co-working spaces or other locations with internet access can now also be used as a workplace.

In this context, statutory accident insurance cover is also being extended, whereby a distinction must be made between telework in the narrow sense and telework in the broader sense.

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Real estate income tax for buildings with fictitious acquisition costs

In its decision of 22.2.2024, Ra 2022/13/0086, the Administrative High Court dealt with the question of how real estate income tax is to be calculated in the case of “old assets” (acquisition before 31 March 2002) if the deprecation (AfA) was calculated on the basis of the notional acquisition costs when the building was first rented out.

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Tips in the hospitality industry from a wage tax perspective

How tips in the hotel and catering industry are treated under wage tax law often proves to be a complex issue. Although tips are exempt from income tax under certain conditions, they are subject to social security contributions as “remuneration from third parties”. Depending on whether fixed rates have been set by the social security agency for the respective industry in the individual federal states, employers are subject to different (record-keeping) obligations.

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Multiple contractor liability: Preventive measures for legally compliant execution

In the construction industry and other economic sectors, contractors are regularly confronted with liability issues. Preventive measures are essential to avoid legal risks and unpleasant liability claims. In this article, we take a look at the liability of contractors and present preventative steps to ensure a legally secure path.

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Business in Europe: Framework for Income Taxation (BEFIT)

On 12 September 2023, the EU Commission published a draft directive on the creation of a common framework for income taxation (BEFIT directive). The draft provides for an EU-wide harmonization of the calculation of the corporate tax base for certain groups of companies. A uniform EU corporate tax system is intended to increase legal certainty and reduce tax compliance costs at the same time. In the meantime, however, several EU Member States have expressed their concerns about the BEFIT directive. 

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On 15.7.2024 the following declarations/payments are due:

• Advance VAT declaration for May 2024.
• Standardized Consumption Tax for May 2024.
• Capital Gains Tax for capital gains on debt securities for May 2024.

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

On 15.8.2024 the following declarations/payments are due:

• Advance VAT declaration for June 2024.
• Standardized Consumption Tax for June 2024.
• Capital Gains Tax for capital gains on debt securities for June 2024.

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