Austria: Notification obligation regarding Country …

1 Austria: Notification obligationregarding Country -by- Country Reports (CbCR)by 31 December |21 November2017 InternationalTax ReviewCurrent information oninternational taxdevelopments providedby EY AustriaContent01 austria : Notificationobligation regarding Country -by- Country Reports (CbCR)by 31 December 201702 Austrian SupremeAdministrative Court:Change of Ownership Ruleapplies despite ConsistentIndirect ShareholderStructure03 Austrian group taxation:issues before year end04 Constitutional Court: Onlineadvertising not covered byAustrian advertising tax04 OECD Developments04 EU Developments04 Country UpdatesThe introduction of the Transfer Pricing Documentation Law (TPDL) in 2016established special transfer pricing Notification obligations for entitiesresident in Notification obligations related to CbCR apply for constituent entities resident in austria (basically all members of a group regardless of legal personality, therefore, also including permanent establishments), that are part of a multinational group (MNE group) whose consolidated total turnover of the previous fiscal year amounts to at least EUR 750 million.

2 The term turnover should be understood as the sum of revenues generated from activities in the market. Such MNE groups need to prepare a CbCR according to the competent Austrian tax office has to be informed on an annual basis bythe last day of the fiscal year for which a CbCR is prepared whether theentity resident in austria is the ultimate parent entity of an MNE group orthe surrogate parent entity of an MNE group that files the CbCR with theAustrian tax the Austrian entity is neither the ultimate parent entity nor the surrogateparent entity of an MNE group that files the CbCR, the Austrian tax officehas to be informed about the identity and residence of the reporting entity( the group entity that prepares and files the CbCR in its state ofresidence).

3 To standardize the Notification process, the Austrian Ministry of Financepublished the form VPDG 1 in its form database (see link below). +&searchsubmit=SucheEY International Tax Review, No. 12/2017 | 2If the fiscal year of the entity is the calendar year, the Notification for 2017has to be submitted to the competent Austrian tax office by31 December 2017. An electronic transmission via FinanzOnline is do not hesitate to contact us in case of any questions regarding thereporting Supreme AdministrativeCourt: Change of Ownership Ruleapplies despite Consistent IndirectShareholder StructureOn 13 September 2017, the Austrian Supreme Administrative Court(2015/13/0007) found that only the change of direct shareholders is relevantfor the application of the change of ownership rule.

4 Under Sec 8/4/2 AustrianCIT Act, tax loss carry forwards are forfeited, in case of substantial changes inthe economic, organizational and shareholder structure within a certaintimely context, in case there is a connection ( overall plan ) between thesingle changes. An exemption rule applies for certain a tax audit, the purchase of a company was qualified as a change ofownership leading to the forfeiture of tax loss carry forwards because theshareholder structure, beside the organizational and economic structure,changed significantly. Also after the sale of the shares, two of the threeformer direct shareholders still held shares in an intermediate company andremained indirect change of ownership Federal Fiscal CourtFollowing a complaint, the Austrian Federal Fiscal Court held that the term shareholder structure includes not only the direct shareholders, but also thewhole indirect shareholder the Federal Fiscal Court, the interposing of a company between theoriginal shareholders and the company does not lead to a complete change ofthe shareholder structure.

5 The Federal Fiscal Court pointed out that theshareholders decision-making authority remained in the same hands of ownership Supreme Administrative CourtThe Austrian Supreme Administrative Court did not follow the AustrianFederal Fiscal Court and held that a change at the direct shareholder level isgenerally of relevance for the application of the change of ownership Supreme Administrative Court did not explicitly refer to a case where thedirect shareholders remain the same, although there is a substantial change inthe indirect shareholder structure. Following the argumentation of the Court,the change of ownership rule should not apply in such the analysis of implications for your individual case, please contact yourEY tax IncomeTax ActAustria: Notification obligation regarding Country -by- Country Reports (CbCR) by 31 December 2017 EY International Tax Review, No.

6 12/2017 | 3 Austrian group taxation: issues beforeyear endUnder the Austrian group taxation regime, tax losses of group members canbe offset against tax profits of other group members. Main prerequisite is thatthere is a participation of more than 50% of the share capital and the majorityof voting rights during the whole fiscal a tax group should be established or if an already existing tax group shouldbe extended for the tax year 2017 (for groups with balance sheet date31 December 2017), the group application forms have to be verifiably signedby 31 December 2017 at the latest. Furthermore the signed group applicationforms have to be filed with the Austrian tax authorities within one month of participations in subsidiaries made before the subsidiaryjoined the tax group remain tax deductible and have to be spread over sevenyears for tax foreign subsidiaries are currently in a loss position and if under foreign taxlaw tax loss carry forwards are limited timely, the inclusion of the foreignsubsidiaries into an Austrian tax group should be considered.

7 Only foreignentities resident in countries with which austria has agreed on comprehensiveadministrative assistance can be included into a tax of foreign group members must be calculated based on Austrian taxlaw. Foreign losses calculated under Austrian tax law may be higher thanunder foreign tax law. However, the deductibility of such losses is limited tothe actual losses calculated under foreign tax law. The utilization of losses offoreign group members is limited to 75% of the domestic group losses are included in the loss carry forwards for subsequent of participations in group members (to their lower fair marketvalue) are tax-neutral at the level of the parent company.

8 If a new tax groupshould be established in 2018, potential depreciations of future groupmembers should be considered when drawing up the financial statements2017. Goodwill amortization is no longer possible for share deals after28 February 2014. Open amortization amounts ( fifteenths ) basically remaintax cancellation of an existing tax group in 2017 should be considered, ifparticipations in group members have to be depreciated in the financialstatements 2017. If group members suffer high losses in 2017, which cannotbe offset against taxable profits of other group members, it may be advisableto (partly) cancel the existing tax group. A new tax group could then beestablished as soon as the companies are in a profit situation again.

9 Groupmembers can completely offset their taxable income against pre-group taxloss carry forwards (the 75% limitation does not apply). A tax group must existfor at least 3 entire fiscal years before it is cancelled. Otherwise CIT will bereassessed as if the tax group never existed. When establishing a new taxgroup, a new three year period will IncomeTax ActEY International Tax Review, No. 12/2017 | 4 Constitutional Court: Onlineadvertising not covered by Austrianadvertising taxOn 12 October 2017, the Austrian Constitutional Court (E 2025/2016-26)declined complaints of newspaper publishers and radio stations against theAustrian advertising tax. The reason for the complaints was that undercurrent legislation, online advertising is not subject to 5% Austrian advertisingtax (Werbeabgabe).

10 The Constitutional Court stated that it is at the discretion of the legislator notto cover online advertising services, which are often rendered by non-residentservice providers, in contrast to advertisement in newspapers, radio Developments The Latest on BEPS 6 November 2017 Read more The Latest on BEPS 23 October 2017 Read more OECD holds second public consultation on attribution of profits to PEs andprofit splits Read moreEU Developments European Commission opens State aid investigation into UK CFC rules Read mo reArgentina Argentine Executive Power proposes new comprehensive tax reform Read mo reBarbados Barbados conducting review on OECD-designated preferential regimes Read mo reBelgium Belgian Government approves draft law on corporate tax reform including100% participation exemption Read moreBrazil Brazil amends tax rules of certain investment funds Read moreOECD