English Summary 2/2025

The Austrian Corporate Income Tax Act prohibits the deduction of intragroup interest and license fee expenses if these are subject to taxation of less than 10 % at the level of the receiving corporation. In two recent rulings by the Austrian Federal Finance Court, it clarified that in cross-border situations within the European Union or the European Economic Area the prohibition of deduction only applies to cases of tax abuse and cases of unusually high interest rates.

L. Andreaus / J. Derflinger / J. Joksch

In its ruling of December 12, 2024, Weatherford Atlas Gip, C-527/23, the ECJ dealt with the question whether the deduction of input VAT can be denied because the national tax authority questions the profitability of the incoming supply.

E. Freitag / C. Bianco

The EU Commission's "VAT in the Digital Age" (ViDA) initiative cleared its final legislative hurdle at EU level in the ECOFIN on March 11, 2025. This paves the way for significant adaptations of EU VAT law to meet digital age challenges. A key aspect of ViDA is the introduction of new digital, near real-time reporting requirements for intra-Community B2B transactions starting July 1, 2030, based on e-invoices, replacing the recapitulative statement. This change from periodic to continuous transaction controls based on e-invoices follows an international trend to combat the VAT gap, especially the part caused by fraud. Some European countries have already introduced similar rules for domestic B2B transactions, and many other key EU member states are planning to introduce their own national rules in the near future. In addition, ViDA now requires all EU member states to introduce new CTC based on e-invoices for intra-Community B2B transactions. ViDA is thus heralding a new era in the concept of invoicing, as e-invoices will become the new ‘normal’ in the area of intra-Community B2B transactions. All Austrian companies that carry out such transactions will therefore have to switch to the ViDA-based CTC and the associated exchange of e-invoices. This paradigm shift will have a significant impact on inbound and outbound business processes, reporting and the company's IT ecosystem. In this dynamic environment, companies should prepare for the new challenges as quickly as possible.

K. Krippner / M. Zwick-Pevny

Since a change in the law in 2018, it is possible to reopen proceedings within three years of the last decision of the tax authority or the administrative court. This means that a tax assessment can be made even after the limitation period has expired, often to the surprise of the taxpayer.

S. Papst / W. Gurtner

The statute of limitations for evaded taxes is an ongoing topic of discussion in the tax and financial criminal law debate. The article shows current cases from case law and illustrates various nuances and subtleties comparing tax proceedings and financial criminal proceedings.

S. Papst / G. Schaunig

A recent decision by the Austrian Federal Finance Court dealt with the question of whether an advance VAT return submitted late via FinanzOnline as an implied voluntary self-disclosure by a tax-liable company can have an exonerating effect under Austrian financial criminal law for the managing director if he is not explicitly named. The decision emphasizes the necessity of formally fulfilling the requirements for a voluntary self-disclosure, in particular the explicit naming of the perpetrator, in order to avoid consequences under financial criminal law.

S. Papst / W. Vötter

Generally speaking, expenses which are related to tax exempt income are not tax deductible. The Austrian Federal Finance Court, however, recently stated that FX losses which arise in the period between the date of the dividend resolution and the date of payment are tax deductible. The tax office argued that the FX losses are to be seen as directly connected to the tax-exempt dividend income and therefore are not tax deductible. However, the Austrian Federal Finance Court found that FX losses and dividend income are to be seen and treated differently. Tax office appealed against this decision.

The Austrian tax group regime provides for the temporarily use of foreign tax losses. However, in certain cases, a claw-back of foreign tax losses occurs. For example, upon the sale of the participation in a foreign subsidiary (foreign tax group member), the tax losses considered in Austria need to be reversed. In the case decided by the administrative court it was questionable at which level the claw-back needs to be accounted for. According to the argumentation of the taxpayer, the claw-back follows the chain of companies, ie is to be included in the income of the Austrian company, which held the participation in the foreign subsidiary. The respective Austrian company had pre-tax group losses, which would have shielded the claw-back. The Austrian Federal Finance Court, however, stated the claw-back of foreign tax losses is to be considered directly at the level of the tax group parent, irrespective of the company tiers. The taxpayer appealed against this decision to the Austrian Administrative Supreme Court.

I. Ebenberger

The Austrian Federal Finance Court recently decided regarding the appeal of a lawyer against the denial of the input VAT deduction from services related to a settlement payment for which no invoice could be provided.

E. Freitag / K. Pham

In its ruling of 13th March 2025, C-640/23, Greentech SA, the CJEU dealt with the question whether and under what conditions a direct refund of unduly paid VAT is possible by the tax authorities.

E. Freitag / A. Mühlberger

According to the Austrian Stamp Duty Act, certain transactions are subject to Austrian stamp duty if there is a signed written document. For rental contracts stamp duty of 1 % is triggered depending on several factors, such as in particular the term of the rental contract, the yearly rent and the operating costs borne by the tenant. Furthermore, if the rent is subject to VAT, also the VAT increases the tax base accordingly.

According to the Austrian VAT Act, however, the rentals for business purposes are, in principle exempt from VAT which entails that the landlord cannot deduct input VAT. However, the VAT Act offers the option to treat the rental as fully taxable at the standard 20% Austrian VAT rate provided that the tenant uses the property only for purposes that almost fully (> 95 %) entitle him to deduct input VAT.

In a recent case decided by the Austrian Federal Finance Court, the respective rent was exempt from VAT because the tenant did not fulfill the above requirements stipulated by the VAT Act. Nevertheless, the rental contract contained a clause according to which the landlord is entitled to exercise the option to treat the rent as fully taxable for VAT purposes if possible (e.g. because the tenant’s situation changes and he only renders fully VAT-able services). In such case, the VAT naturally increases the monthly rent. The Austrian Federal Finance Court concluded that 20 % VAT has to be added to the tax base even though it was not feasible to exercise the option for VAT at the time the rental contract had commenced.

M. Vaishor

The CO2 certificate costs, which was introduced with the Eco-Social Tax Reform 2022, has also significantly increased the running costs of energy-intensive companies in recent years.

• For this reason, energy-intensive companies that meet certain criteria will be relieved of 45 % of the additional burden from the National Emissions Allowance Trading Act 2022 (NEHG 2022). Companies that operate in a sector at risk of carbon leakage receive relief of between 65 % and 95 %.
• Costs relating to certain energy sources (e.g. petrol, gas oil, heating oil, natural gas, liquid gas, coal, kerosene) that are used for heating purposes (process heat, space heating) are eligible.
• The application period for relief relating to the year 2024 extends from May 1 to June 30, 2025.
• The relieved companies must prove within the next 12 months that they will invest at least 50 % (80 % in subsequent years) of the relief granted in climate protection measures.

Due to the recent increase in energy taxes and CO2 pricing, your company (energy-intensive business) may now be eligible for support, unlike in previous years! We will be happy to support you in checking whether the eligibility requirements (energy intensity) could be fulfilled in contrast to the previous year and whether the amount of funding is now much more attractive for you. We will also be happy to assist you with the application process.

O. Mavher / M. Petritz

In its judgment of 16th January 2025, Baltic Container Terminal, C-376/23, the CJEU dealt with the question of whether an economic operator who has a customs authorization for a special customs procedure may rely on the confirmation of the change of customs status of the customs authorities or whether there is an obligation for the economic operator to check the reason for the change.

E. Freitag / S. Antschev

A taxpayer is mandatorily subject to wage tax assessment if, during the calendar year, at least two types of income, which are subject to separate wage tax deductions, were received instantaneously. The separate taxation of pensions and benefits in kind triggers the requirement for mandatory assessment. The Austrian Administrative Supreme Court considers the direct action by the tax office against the taxpayer to be unobjectionable in a recent decision.

K. Daxkobler / S. Rettenbacher

The tax office sends documents to the databox of a limited liability company (GmbH) at the attention of the managing director. According to the Austrian Administrative Supreme Court, this person is the only formal addressee, thus the documents are not received by the managing director when they get into the databox of the Limited. The tax office should have sent the documents to the databox of the managing director. Consequently, the actual receipt takes place when the managing director gets these documents indeed. This distinction is important for the beginning of the deadlines.

C. Endfellner