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13.5. Other Anti-Avoidance Rules

Hybrid Mismatches

Effective 1 January 2020, Austria adopted hybrid mismatch rules in line with the EU Anti-Tax Avoidance Directive (ATAD 2). The hybrid mismatch rules prevent entities that are liable to income tax in Austria from being able to avoid income taxation, or obtain a double non-taxation benefit, by exploiting differences between the tax treatment of entities and instruments across different countries.

If a mismatch arises, it is neutralized by:

  • Disallowance of the deduction of expenditure under the hybrid arrangement to the extent that the corresponding income is not included in the tax base or is deducted twice; and
  • Inclusion of the income arising from hybrid arrangement as taxable income to the extent that it is deductible for the payer.

Exchange of Cross-Border Tax Rulings

In line with BEPS Action 5 and the EU directive on mutual administrative assistance, Austria adopted various measures in its domestic laws to enable the exchange of information on cross-border tax rulings and advance pricing agreements (APAs) beginning from 1 January 2017.

Financial Account Information Reporting and Exchange

Effective 2017, Austria adopted measures to implement the automatic exchange of financial account information under the EU directive on mutual administrative assistance, as well as under the Common Reporting Standard (CRS) implementing the Automatic Exchange of Information (AEOI) under the OECD auspices. The Austrian Ministry of Finance periodically updates the list of AEOI-CRS participating jurisdictions. Further, Austria and the US have concluded an Intergovernmental Agreement (IGA) for the purposes of the US Foreign Account Tax Compliance Act (FATCA).

On 1 May 2022, Austria adopted the updated list of 84 countries that have signed the international agreement on administrative assistance in tax matters (OECD MCAA) and are considered as participating states in 2021.

Effective 23 March 2022, Austria suspended the exchange of information with Russia under the OECD MCAA.

Mandatory Reporting of Cross-Border Tax Arrangements (DAC6 / MDR)

Austria implemented the EU Council Directive (DAC6), which requires the reporting of cross-border tax planning arrangements and the exchange of information with the other EU Member States. The reporting requirement primarily applies to intermediaries that design, market, organize, or manage the implementation of a reportable arrangement. However, the reporting requirements may also be applied to the taxpayers in certain cases, including where an intermediary is subject to confidentiality obligations or where a taxpayer has designed an arrangement without external intermediaries.

The requirements apply from 1 July 2020. Reportable transactions are required to be disclosed within a period of 30 days from the date the arrangement was first put in place. However, under a transitional regime, reportable transactions first put in place between 25 June 2018 and 30 June 2020 are required to be disclosed by 31 August 2020. Failure to comply with the reporting requirements through willful or gross negligence attracts fines as determined on the basis of the company's net sales at the time of the offense.

COVID-19 Emergency Measures

Due to the difficulties faced by business and tax administrations as a result of the COVID-19 pandemic, the EU Council agreed to a 6-month optional deferral for DAC-6 reporting. The amended directive was gazetted in the EU Official Journal on 24 June 2020. Whilst it is expected to be adopted by most Member States, the deferral is a mere option that the Member States are free to adopt or decline. In all cases, the deferral does not impact the effective reporting dates, which remain 25 June 2018 for “historic” reportable arrangements and 1 July 2020 for regular reporting.

The option to defer the DAC6 reporting deadlines is not being exercised in Austria. However, due to technical delays at the Union level, the deadline for the electronic submission of reportable arrangements is extended from 31 August 2020 until 31 October 2020 without penalty in respect of historic reportable arrangements. It is clarified that the extension applies for historical arrangements implemented between 25 June 2018 and 20 June 2020, as well as arrangements that became reportable from 1 July 2020.

Mandatory Reporting of Information by Digital Platform Operators (DAC7)

Effective 1 January 2023, Austria implemented the EU Council Directive (DAC7) which requires digital platform operators to report information about income earned by sellers of goods and services through their digital platforms. Digital platforms generally consist of any software, including a website or a part thereof, and applications, including mobile applications, accessible by users and allowing sellers to be connected to other users for the purpose of carrying out a relevant activity, directly or indirectly, to such users.

The reporting obligations apply to reporting platform operators. A reporting platform operator is an entity that provides a digital platform for facilitating a connection between buyers and sellers for carrying out a relevant activity and that meets any one of the following conditions:

  • Is a resident for tax purposes in Austria;
  • Has a registered office, place of management, or permanent establishment in Austria; or
  • Facilitates relevant activities of EU sellers or the rental of immovable property located in a Member State.

A relevant activity is an activity carried out for consideration including the following:

  • Renting and leasing of immovable property, including residential and commercial property and parking lots;
  • Provision of personal services;
  • Sale of goods; and
  • Renting of any mode of transport;

Digital platform operators that are subject to the DAC7 reporting requirements have to register with the Austrian tax authorities. The report is required to be submitted annually by 31 January of the following calendar year. The information reported is automatically exchanged with the tax authorities of the concerned EU Member State for enforcing tax rules and ensuring tax compliance.

Failure to comply with the registration or reporting requirements may attract a levy of penalty. If failure to comply is through willful negligence, a penalty of EUR 200,000 may be levied. If failure to comply is through gross negligence, a penalty of EUR 100,000 may be levied.

Exit Tax Rules

In 2018, Austria amended the current exit tax rules to bring them in line with the EU Anti-Tax Avoidance Directive (ATAD1), see Sec. 11.1.

Ultimate Beneficiary Disclosure

Legal entities resident in Austria are required to identify and report their ultimate beneficiaries. Ultimate beneficiaries include individuals that directly or indirectly hold at least 25% of the capital or voting rights of the entity or otherwise exercise ultimate control. The obligation applies for resident stock companies, limited liability companies, partnerships limited by shares, foundations, trusts, investment funds, and several other entity types, although certain exemptions apply. The deadline for the initial registration of the ultimate beneficial owners was 1 June 2018. New companies are required to register the ultimate beneficial owners within four weeks of incorporation.