The Austrian Federal Finance Court held that an assignment of receivables by a taxpayer to a company located in Malta, with which the taxpayer frequently engaged in trade and transactions, was an abusive arrangement.
The facts in this case are as follows:
The Austrian Federal Finance Court agreed with the position of the tax authorities, finding that the arrangement led to various downsides for the GmbH (the liability still existed and the Maltese corporation, as the new creditor, charged interest). It was further noted that it was not believable that the GmbH or the directors were not able to raise the comparatively small amount in order to get rid of the receivable and to improve the companies’ economic situation. Thus, the court determined that assignment of the receivable must be denied under the general anti-avoidance rule in Article 22 of the general federal fiscal code (the provision that provides a write-off of receivables must be assumed, resulting in greater taxable income on the GmbH-level).
Note that with the 2018 tax reform (Jahressteuergesetz 2018), the definition of abuse in Article 22 was revised to reflect the EU Anti-Tax Avoidance Directive (ATAD).
Read a December 2019 report prepared by the KPMG member firm in Austria
Other developments briefly discussed in this report include the following:
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