English Summary 1/2025

In respect of fees paid in 2024 for certain services outside of employment relationships to individuals or partnerships (associations) without legal capacity and for certain outbound payments effected in 2024, entrepreneurs as well as corporations under public and under private law have to submit a notification according to Art 109a ITA resp. Art 109b to the tax office by way of electronic data transmission until 28th Feb 2025.

K. Daxkobler

The proof of residency for the relief of withholding tax at source according to the ordinance on double taxation relief “DBA-Entlastungsverordnung” often causes discussions during tax audits. In the opinion of the Austrian tax authorities, the relief at source can only be granted if the forms ZS-QU 1 or ZS-QU 2 indicating the confirmation of the residency by the foreign tax authorities are provided. The Austrian Administrative Supreme Court has indicated in a decision that a proof can also be provided in other ways. However, the court left it unclear which alternative evidence could have been provided that should have been accepted by the Austrian tax authorities.

S. Papst / S. Stadik

Amendments to the double tax treaty between Austria and China were agreed upon, which will now apply to certain income received in tax years starting from 1st January 2025. Beneficial effects arise, for example, for Austrian companies that carry out construction and assembly services in China. Effects for taxpayers resident in Austria who receive dividends, interest or royalties from China should also be considered.

G. Gottholmseder / L. Maukner / A. Eder / M. Barz

A recent decision by the Austrian Federal Finance Court confirms the view of the Austrian Ministry of Finance that payments for purchase of software copies used for internal business purposes do not constitute license fees within the meaning of the Double Taxation Treaty between Austria and China. Consequently, withholding tax retained in China on such payments cannot be credited.

G. Gottholmseder / L. Maukner / A. Eder / M. Barz

In its ruling of October 17, 2024, Digital Charging Solutions, C-60/23, the CJEU dealt with the question of the extent to which e-mobility providers are integrated into the supply chain for electricity if the e-mobility provider offers other IT services in addition to the supply of electricity.

E. Freitag / C. Bianco

If the authority has all the information on the material requirements for input VAT deduction, it may not stipulate any additional requirements that could deny the right to input VAT deduction due to the principle of VAT neutrality. According to the Austrian Administrative Supreme Court, this also applies in the case of intra-Community acquisitions if recording and declaration obligations where breached.

E. Freitag / A. Mühlberger

The CJEU, in its judgment of October 4, 2024, UP CAFFE, C-171/23, addressed the question of whether a taxpayer can be denied the use of the Croatian small business scheme due to a suspected abusive practice (company formation), even though the national legal system did not provide a legal basis for denying the use of the small business scheme for such cases during the disputed period. According to the CJEU's case law, national authorities and courts are obliged to deny the use of the small business scheme, even if national law does not contain specific laws prohibiting abusive practices.

E. Freitag / K. Pham

In the CJEU decision from 14.11.2024, C-613/23, Herdijk, the CJEU deals with the joint and several liability of managing directors towards the tax office in the event of a neglection of their duties. The ruling shows that national laws are often only opposed by the framework of proportionality, especially if European legislation leaves the Member States room for implementation.

E. Freitag / C. Summerer

In its ruling of December 12, 2024, Dranken Van Eetvelde, C-331/23, the CJEU dealt with the question of the conditions under which Member States may impose joint and several liability for the payment of VAT by a third party.

E. Freitag / C. Bianco

The Austrian Administrative Supreme Court (VwGH) questions the scope of input tax deduction within the framework of a trade owned by a local/regional authority (such as e.g. a municipality) or NPOs. The court approaches the issue solely from an EU law perspective – particularly regarding the alloca-tion of input services to the taxable outputs of the BgA – and ultimately refers the matter back to the Federal Finance Court.

E. Müller

Recently, the regulations and values in social security, labor and income tax law were published for 2025.

A. Shubshizky / C. Vogt / K. Daxkobler

The taxpayer was suffering from a physical ailment for years and therefore required annual treatments on the basis of a medical report. In this case, according to the Austrian Constitutional Supreme Court it is not necessary that the taxpayer gets an annual medical certificate issued by a doctor for each tax year to be allowed to deduct the payments as extraordinary expenses. The Austrian Federal Finance Court had previously taken a stricter approach and demanded a (yearly) medical certificate.

C. Endfellner

If the time limit for an appeal is missed, restoration is possible (Art. 308 Austrian Federal Fiscal Code). Requirement: The taxpayer was not at fault or only slightly negligent. If a (deadline) control system is set up and this proves to be incomplete, the taxpayer is responsible for gross negligence. Consequence: The failure to meet the deadline cannot be "remedied" according to a recent decision by the Austrian Administrative Supreme Court.

S. Papst / G. Schaunig

Violations of UBO reporting obligations can be remedied by means of voluntary disclosure in accordance with Art. 29 Austrian Fiscal Criminal Act. Until now, it was unclear how to make good the “damage” to the register authority. In the opinion of the Austrian Ministry of Finance, a correction report had to be electronically submitted to the register authority “simultaneously” with or immediately after the voluntary disclosure in order to ensure that the voluntary disclosure grants an exemption from penalties. In contrast, according to the most recent case law of the Austrian Federal Finance Court, no corrective notification to the register authority is required at all for voluntary disclosures in matters of the UBO reporting obligations.

S. Papst / M. Meilinger

The Ultimate-Beneficial-Owners Register Act (WiEReG) requires that changes identified during an annual review of beneficial owners be reported or data already reported be confirmed. Anyone who fails to comply with their reporting/confirmation obligation despite being requested to do so twice is guilty of a financial offense. A lawyer who does not read documents delivered in the FinanzOnline-Databox due to a lack of access to the Databox and without having set up email notification acted with gross negligence in the specific case and was to be punished in accordance with the WiEReG according to a decision of the Austrian Administrative Supreme Court.

S. Papst / G. Schaunig

In certain cases (e.g. share deals, gifts) Austrian real estate transfer tax (RETT) is generally calculated based on the so-called “real estate value” which is a special tax value that can be calculated as a lump sum based on the provisions of a respective ordinance issued by the Ministry of Finance. In a recent decision, the Austrian Administrative Supreme Court dealt with open questions regarding the calculation of the real estate value in case of industrial properties. KPMG Austria is happy to provide support regarding the calculation of the real estate value of Austrian properties.

M. Vaishor / F. Popl

In a recent case concerning the private rental of a condo by an individual, the respective taxpayer partially financed the acquisition with debt. The bank only paid out a reduced amount since certain costs such as e.g. credit brokerage, appraisal costs, administration fees etc were deducted. The Austrian Federal Finance court decided that these costs can be recognized as expenses in the year of the pay-out of the loan and do not have to be recognized spread over the term of the loan.

M. Vaishor