Tax News: English Summary 11-12/2019
English Summary 11-12/2019
English Summary of Newsletter
Austrian Federal Finance Court on abusive assignment of receivables
The Austrian Federal Finance Court recently decided in the following case: An Austrian limited liability company (“GmbH”) had liabilities (MEUR 1) against an Austrian bank. The bank proposed to waive the receivables against a small payment (TEUR 35). The waiver would increase the taxable income of the GmbH. The director of the GmbH suggested to assign the receivables to a Maltese corporation, which the GmbH was frequently trading with (the GmbH-director was also a director of the Maltese corporation). The Austrian tax authorities qualified the arrangement as abusive, as it is unusual and inadequate. The Austrian Federal Finance Court confirmed this view due to the following reasons: The arrangement led to various downsides for the GmbH (the liability is still existing and the Maltese corporation as the new creditor charged interest). It is further not very believable that the GmbH or the directors were not able to raise the comparatively small amount of TEUR 35 in order to get rid of the receivable and to improve the companies’ economic situation. Thus, the court decided that the assignment of the receivable has to be denied under the general anti-avoidance rule in Art 22 of the general federal fiscal code (i.e. a write off of receivables has to be assumed which leads to a higher taxable income on GmbH-level in the case at hand).
Please note that with the 2018 tax reform (Jahressteuergesetz 2018), the definition of abuse in Art 22 of the General Federal Fiscal Code has been revised in order to take account of the EU Anti Tax Avoidance Directive (ATAD).
Markus Vaishor / Katrin Postlmayr
Austrian Federal Fiscal Court: Daily aliquoting of input tax adjustment is appropriate
The Austrian Federal Finance Court decided on September 23rd, 2019 (RV/7103170/2016) that a daily aliquotation of the input tax adjustment in accordance with Art 12 sec 10 Austrian VAT Act is required if a monthly input tax adjustment would not provide an appropriate result.
Esther Freitag / Alfred Mühlberger
CJEU: Knowing or should have known in connection with an involvement in a VAT fraud
In its judgement of October 3, 2019, „Altic“ SIA, case C-329/18 the CJEU decided two questions referred for a preliminary ruling by the Supreme Court of Latvia. According to the answer to the first question a taxable person who participates in the food chain must not be refused the right to deduct input VAT on the sole ground that that taxable person has not complied with its obligations under Article 18(2) of EU-Regulation No 178/2002 (Regulation laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety) to identify his suppliers for the purposes of traceability of foodstuffs. In the answer to the second question the CJEU held that the failure, by a taxable person who participates in the food chain, to ascertain that his suppliers are registered with the competent authorities, in accordance with the EU-Regulation on the hygiene of foodstuffs) and EU-Regulation on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules), is not relevant for the purpose of determining whether the taxable person knew or should have known that he was involved in a transaction involving VAT fraud.
Esther Freitag / Wolfgang Hornich
CJEU: The denial of input VAT deduction due to an (abusive?) supply chain
In its ruling of 10 July 2019 (C-273/18 SIA Kuršu zeme), the CJEU has ruled that a supply chain that, in the opinion of the tax authorities, is to be qualified as long but does not result in any tax advantage for the companies involved is not sufficient to classify a transaction as abusive.
Esther Freitag / Christina Pollak
Amendment of the Regulation concerning the Value of Benefits in Kind (“Sachbezugswerteverordnung”) regarding the private use of company cars
The Regulation concerning the Value of Benefits in Kind (“Sachbezugswerteverordnung”) has been amended in several aspects. Besides the definition of the term “motor vehicle” (“Kraftfahrzeug”) and the adjustment of the CO2-emission limit values to the technological progress and new measurement procedure, the calculation of the benefit in kind in the case of demonstration vehicles and in the case of employee contributions has been revised too. Moreover, a rule has been introduced that, in the case of bicycles and motorcycles with no CO2-emission, the benefit in kind is to be determined at the value zero.
Austrian Supreme Administrative Court on disclosure of facts to avoid fiscal criminal consequences
A totally wrong calculation of the depreciation cannot lead to fiscal criminal punishment, if it was fully disclosed in an attachment to the tax return.
Stefan Papst / Wolfgang Gurtner
“Last-minute”-surcharge for voluntary self-disclosures: Austrian Federal Finance Court on the announcement of a tax audit by phone and payment despite a request for suspension of payment
If a voluntary self-disclosure is filed after the “formal notification or any other announcement” of a tax audit, a “last-minute”-surcharge of up to 30 % will have to be paid in addition to the tax payment in order to obtain impunity. Instalment payments and a deferral of the payment are allowed. However, in case of an appeal against the surcharge a so-called suspension of payment is prohibited; see also Tax News 11-12/2018 and 6-7/2019.
According to the latest case law of the Austrian Federal Finance Court also the announcement of a tax audit by phone can trigger the “last-minute”-surcharge. If an announcement merely by e-mail could also trigger the surcharge, was explicitly not considered by the court. Furthermore, as the surcharge was actually paid on time, the self-disclosure lead to impunity despite a request for suspension of payment. On this point, the court deviates from an earlier decision.
S. Papst / Wolfgang Gurtner
Austrian Constitutional Supreme Court on the right of inspection of files: secret means of evidence exceptionally permitted, but mandatory judicial control
The Austrian Communications Authority decided that essential means of evidence have to be made accessible to all parties and thus classified the right of the parties to be heard as stronger than the obligation of secrecy. In contrast, the Austrian Constitutional Supreme Court under certain circumstances permits "secret means of evidence" to be used by the authority to reach a decision without all parties having access to these means. However, all means of evidence must be available to the court in an appeal proceeding.
Stefan Papst / Michael Huber
Austrian Administrative Supreme Court on income tax from the exchange of real property in relation to Austrian partnerships
Capital gains from the sale of real property located in Austria are subject to income tax (irrespective if the capital gains are derived from individuals or e.g. from partnerships via business income). There is a special taxation scheme for the taxation of capital gains from the sale of real property derived by individuals which triggers withholding tax.
The Austrian Administrative Supreme Court recently decided in a case, in which an Austrian partnership exchanged real property for another real property located in Austria. An exchange of assets is, in general, taxable according to Austrian tax law. The Austrian tax authorities taxed the respective capital gain on partnership level, as they argued that a certain exemption in relation to capital gains resulting from the exchange of real property is not applicable. The Austrian Administrative Supreme Court argued, that an Austrian partnership is not subject to tax from an income tax perspective (i.e. the taxable income of Austrian partnerships has to be allocated to its shareholders and is taxed on that level). Thus, the income (withholding) tax assessment issued to the Austrian partnership in relation the capital gains resulting from the exchange of real property contradicts Austrian tax law.
Markus Vaishor / Katrin Postlmayr
Austrian Administrative Supreme Court on reduced tax base for cadaster registry fee
The registration of the change of the legal ownership of real property in the Austrian cadaster is subject to a 1.1 % registration fee. In general, the tax base is the purchase price / fair value of the property. However, in certain cases, the law provides for a lower tax base amounting to the lower of three times the “tax value” (“Einheitswert” – a value issued by the tax authorities which is usually significantly lower than the fair value) and 30 % of the fair value. Cases covered by this privilege are in particular company reorganizations (such as e.g. mergers) and transactions between a company/partnership and its shareholder. Nevertheless, the Austrian Administrative Supreme Court recently decided in a case, in which an Austrian corporation sold real property located in Austria to its shareholder, that the privilege only applies if the parties specifically applied it in the respective motion to the competent cadaster registry court.
Markus Vaishor / Katrin Postlmayr
CJEU confirms retroactive applicability of Commission Regulation (EU) No 651/2014 - restriction of energy tax refund to production companies probably in conformity with EU law
In its decision from 14 November 2019 in the case "Dilly's Wellnesshotel II" (C-585/17) the CJEU follows the Opinion of the Advocate General from 14 February 2019 (see Tax News article 04-05/2019). The restriction of the energy tax refund to production companies made by the national legislator is, thus, likely in conformity with EU law. Although the final decision of the Austrian Administrative Supreme Court, which submitted the questions relating to the energy tax refund to the CJEU in its decision Ro 2016/15/0041 from 14 September 2017, remains to be seen, it seems to be becoming apparent that - contrary to the most recent case-law of the Austrian Federal Finance Court - service companies will not be entitled to an energy tax refund for periods from 2011 onwards.
Gerald Punzhuber / Sandra Minichmayr / Sebastian Tratlehner
FATCA updates relating to recent announcements and publications of the U.S. IRS
- IRS highlights “education based” FATCA certification enforcements process with respect to the review of recent first FATCA certification submissions
- IRS declares a growing intolerance for inaccurate or incomplete reporting on U.S. persons, of which U.S. TINs are considered a key data point
- The recently published “IRS Relief procedures for Certain Former Citizens” (IR-2019-151, released September 6, 2019) should provide sufficient remedy to those account holders
- IRS publishes new FAQ on missing US TINs in section Reporting of FATCA – FAQ General
- Consequences for Reporting Model 2 FFIs regarding FATCA reports with missing US TINs
- IRS publishes draft version of FATCA report 8966 and instructions to form 8966 without significant changes
- IRS publishes the updated version of FATCA IDES User Guide (publication 5190) and FATCA Metadata XML Schema User Guide (publication 5188) and highlights the requirements of the new FATCA Report File Naming Convention that must be strictly followed
Philipp Rümmele / Christiane Edelhauser