A draft regulation regarding controlled foreign corporation (CFC) taxation includes measures concerning the possible assessment of low taxation regarding:
Other rules in the draft CFC regulation provide an “escape clause” with regard to determining whether the passive income earned by a low-taxed CFC is more than one third of its total income, with the one-third limit being determined separately for each fiscal year over a three-year period. Thus, the CFC regime would apply if the sum of passive income generated in the three-year measuring period is more than one third of the sum of the total income generated in these three fiscal years.
There is a “substance escape clause” providing that the CFC regime would not apply if the CFC conducts significant business activity in terms of employees, equipment, assets, and premises. The draft regulation includes a list of business activities that typically do not constitute qualifying business activities.
In applying the CFC regime, losses from the CFC are not attributed to the Austrian controlling corporation, but positive passive income and negative passive income can be offset against each other.
Lastly, the draft CFC regulation includes a “switch-over” provision from the prior CFC rules.
Read a December 2018 report [PDF 367 KB] prepared by the KPMG member firm in Austria
Other topics briefly discussed in this KPMG report include:
© 2020 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.
KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit https://home.kpmg/governance.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.