There is no requirement to file transfer pricing disclosures with the tax return. However, the tax administration takes the position that TP documentation must be prepared contemporaneously and be ready when the tax return is filed.
Taxpayers are required to maintain transfer pricing documentation to substantiate their related party transaction prices.
The documentation is mainly based on the OECD three-tiered approach and includes the following:
- Local file referring specifically to material and controlled transactions of the local taxpayer;
- Master file containing standardized information relevant for all the members of a Multinational Enterprise (‘MNE’) Group; and
- Country-by-Country (CbC) report containing certain information relating to the global allocation of the multinational group’s income and taxes paid together with certain indicators of the location of economic activity within the group (see below).
The Austrian TP Guidelines further confirm that documentation prepared in accordance with the EU code of conduct on transfer pricing documentation for associated enterprises does meet the documentation requirements in Austria.
The Master file requirement is applicable to constituent entities of groups resident in Austria having revenue exceeding EUR 50 million in two previous years.
A Master file must include:
- The organizational structure of the MNE group;
- A description of the group's business;
- Documentation of the group's intangible assets; Documentation of the group's intercompany financing activities; and
- Documentation of the group's financial and tax positions.
The Master file must be prepared contemporaneously (i.e., by the due date of the tax return for the relevant year). It must be submitted to the tax authorities within 30 days of their request.
The Local file requirement is applicable to constituent entities of groups resident in Austria having revenue exceeding EUR 50 million in two previous years.
A Local file must include:
- A description of the local constituent entity, including management structure and business activities;
- Documentation of controlled intragroup transactions involving the domestic business unit, including a description of transactions, identification of related parties involved, a comparability and functional analysis, etc.; and
- Financial Information, including annual financial statements and details of financial data used in transfer pricing.
The Local file must be prepared contemporaneously (i.e., by the due date of the tax return for the relevant year). It must be submitted to the tax authorities within 30 days of their request.
The CbC reporting requirements apply for fiscal years beginning on or after 1 January 2016 for MNE Groups operating in Austria with consolidated group revenue in the previous year meeting a EUR 750 million threshold. The requirements are in line with the guidelines developed under BEPS Action 13, and the requirements of the EU Mutual Assistance Directive, as amended.
The primary reporting obligation falls on the ultimate parent entity of the group (UPE) if resident in Austria. Under a secondary filing obligation, constituent (non-UPE) entities are required to file locally in Austria if:
- The ultimate parent is not required to file a CbC report in its jurisdiction of residence;
- The ultimate parent's jurisdiction of residence does not have a competent authority agreement in place for automatic exchange of CbC reports with Austria; or
- There is a systemic failure of the jurisdiction of residence of the ultimate parent for automatic exchange.
If any of the above three conditions is met, a constituent entity of the group resident in Austria must be designated to fulfill the reporting obligation. However, the local reporting obligation may be waived if a constituent entity in another jurisdiction has been designated as a surrogate to file a CbC report for the fiscal year, provided further that Austria is able to obtain the report from such other jurisdiction through exchange, and proper notification has been provided by the local constituent entity to the Austrian tax authorities by the end of that fiscal year. Finally, an Austrian constituent entity is permitted to act as a surrogate parent and file in Austria on behalf of the entire group.
The new requirements also include that all constituent entities resident in Austria must provide notification to the Austrian tax authorities on:
- Whether the entity is the ultimate parent of the group or acting as a surrogate; or
- The identity and residence of the entity submitting a CbC report on behalf of the group.
The notification must be provided by the end of the fiscal year concerned.
When required, the CbC report must be submitted electronically within 12 months following the end of the ultimate parent's fiscal year.
If documentation and/or supporting documents are not available in German, the tax authorities have the right to request a translation to German at the taxpayer’s expense. In practice, however, English language documentation is also accepted. However, country-specific documentation relating to Austria in the framework of an EU-broad Master file is required to be prepared in German. This has been confirmed in a written opinion of the Austrian Ministry of Finance and is based on the rule that country-specific documentation in the framework of an EU Master file needs to be prepared in the language of the relevant Member State. CbC reports, on the other hand, are required to be submitted in English.
Failure to comply with the new documentation requirements attracts penalties of up to EUR 50,000.