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5.3. Tax Consolidation / Group Treatment

Austria allows for the group consolidation for tax purposes subject to certain conditions, including:

  • The head of the tax group must be an Austrian corporate entity (or branch of an EU/EEA corporate entity);
  • At least 50% of the capital and voting rights of subsidiaries must have been directly or indirectly held by the head of the tax group since the beginning of the subsidiary's fiscal year; and
  • Only corporation may be members of a consolidated group.

When the conditions are met, 100% of the taxable income of domestic group members is allocated to the taxable income of the head of the tax group, regardless of shareholding percentage.

If a head of the tax group or any member of the group, acquires a holding in any Austrian corporation and the acquired entity becomes part of the tax group, then goodwill is eligible for amortization over a period of 15 years. Deduction towards such amortized goodwill is restricted to 50% the acquisition costs. The benefit of such amortization is not available for participations acquired post 28 February 2014. In case of acquisitions prior to 1 March 2014, any remaining amortized goodwill (1/15 per year), continues to be tax deductible, subject to fulfillment of conditions.  

The acquisition of participations in foreign corporations is not eligible for such amortization of goodwill. However, the Court of Justice of the European Union (CJEU) has held that such differential treatment for resident Austrian holdings and non-resident holdings violates the EU freedom of establishment principle.  Note that the decision of the CJEU has an impact only on acquisitions made prior to 1 March 2014.

Under the group tax regime, foreign subsidiaries may also be included when directly held by the head of the tax group, and the foreign subsidiaries’ legal form is comparable to an Austrian corporation. However, profits of a foreign subsidiary are generally not included in the taxable income of the head of the group, and foreign losses may only be included in proportion to the shareholding percentage. Effective 1 January 2015, the offset of foreign losses is restricted to the extent of 75% of the taxable income of Austrian resident group members (see Sec. 7.1.).

Effective 1 March 2014, only corporations resident in other EU Member States and in jurisdictions that have concluded a comprehensive mutual assistance agreement with Austria, can be regarded as foreign subsidiaries for group taxation purposes. As on 1 January 2022, the Austrian Ministry of Finance updated the list of countries with which it has concluded comprehensive mutual assistance agreements as follows:

ArubaAntigua and BarbudaBelarusBelgium
British Virgin IslandsBermudaBulgariaChile
CanadaBruneiCayman IslandsColombia
China (People's Republic)Cook IslandsCosta RicaCuraçao
DenmarkEl SalvadorCroatiaCyprus
EcuadorEswatini (former Swaziland)DominicaCzech Republic
EgyptFranceEstoniaDominican Republic
FinlandGermanyGeorgiaFaroe Islands
GreenlandGuatemalaGuernseyHong Kong
Isle of ManIsraelIrelandJamaica
Korea (Republic of)KosovoLiechtensteinMalta
MoldovaMarshall IslandsMontenegroNamibia
NauruNew ZealandNorwayPakistan
NiueNorth MacedoniaPhilippinesParaguay
Saint Kitts and NevisSaint LuciaSaint Vincent and GrenadinesSingapore
San MarinoSaudi ArabiaSeychellesSouth Africa
Sint MaartenSlovak RepublicSwedenSwitzerland
TajikistanTaiwanThailandTurks and Caicos Islands
TunisiaTurkeyTurkmenistanUnited Kingdom
UgandaUkraineUnited Arab EmiratesUnited States of America

Group members from non-qualifying countries, existing as on 1 March 2014, were allowed to retain their status till 31 December 2014. Post which, their memberships were automatically terminated (see Sec. 7.1. for implications of this amendment on foreign group losses)

The tax consolidation group (domestic or foreign), once formed, must be maintained for at least 3 years. If a member leaves the group within the 3 year limitation, it will be taxed retroactively as a single entity with the loss of all group tax effects.