Austria: Information on the Transfer Pricing Documentation Law

Transcription

1 No. 01/ January 2018 International Tax Review Current information on international tax developments provided by EY Austria Austria: Information on the Transfer Pricing Documentation Law Content 01 Austria: Information on the Transfer Pricing Documentation Law 03 Updated List of Countries with Comprehensive Administrative Assistance 04 Reporting obligations for certain payments under Sec. 109b Austrian Income Tax Act 05 Austria: Expiry of the State Subsidy for Additional Employees 05 OECD Developments 05 EU Developments 05 Country Updates In 2016, the Transfer Pricing Documentation Law (TPDL) as well as the regulation for implementation of the TPDL (TPDL-R) introduced new documentation obligations for transfer prices for Austrian constituent entities (applicable for financial years as from 1 January 2016). In December 2017, the Austrian Federal Ministry of Finance published additional information on the TPDL (BMF /0519 IV/8/2017). Country-by-Country report (Section 1) As concerns the country-by-country report (CbCR) there is the statement that the report should, as recommended by the OECD, not be used as a substitute for a detailed transfer pricing analysis of individual business transactions and prices. Further, the decree deals with certain definitions (constituent entity, ultimate parent company) and refers to the obligation to prepare a CbCR (turnover threshold EUR 750 million, entering into the reporting obligation, Parent Surrogate Filing) and the notification obligation (notification deadline, change of circumstances after notification). The decree also addresses questions related to the content of the CbCR (i.e. data source, conversion, individual key figures). The following statements are provided regarding US and Swiss parent companies: For 2016, US and Swiss parent companies can enter into reporting obligations as surrogate parent entity, as neither in the US nor in Switzerland a CbCR has to be drawn up obligatorily for 2016, but can be drawn up voluntarily.

2 Austria: Information on the Transfer Pricing Documentation Law At the same time the decree states that the ultimate parent companies in the US and Switzerland cannot enter into the reporting obligations under Sec. 5 (3) TPDL. Currently parent companies of both states do not meet Sec. 5 (3) TPDL. There is no qualifying agreement for the exchange of CbCR between Austria and the US. Austria and Switzerland have entered into a qualifying agreement within the agreement on mutual assistance, but this is not yet applicable for CbCR in Further, there is no qualifying agreement based on the Double Tax Agreement between Austria and Switzerland. In cases with ultimate parent companies in the US or Switzerland the competent tax authorities basically need to oblige the Austrian constituent entity by notice to enter into the reporting obligation under Sec. 5 (2) TPDL, unless the constituent entity or another Austrian constituent entity voluntarily enter into the reporting obligation under Sec. 5 (1) TPDL. For the notification obligation (form VPDG1), it is clarified that the due date ( until the last day of the fiscal year for which a CbCR is prepared ) relates to the circumstances of the multinational group (basically of the ultimate parent company). Furthermore, in case of change of the relevant circumstances, there is the possibility to file a corrected form VPDG1 via FinanzOnline within 12 months after the end of the fiscal year. Master File / Local File / TPDL-Regulation (Section 2) Regarding Master File, Local File and TPDL-R, the decree deals with topics that relate to the Master File and the Local File (e.g. the term revenue, other documentation obligations, materiality). Subsequently it deals with selected questions regarding the Master File related to the description of the business activity and the presentation of supply chain. Regarding the Local File, the Federal Ministry of Finance comments on the documentation of material intragroup business transactions (especially on the documentation of domestic transactions) and the presentation of the context between the financial statements and the applied transfer pricing method. The Federal Ministry of Finance clarifies that there is no obligation to prepare Master Files and Local Files if the turnover threshold is not exceeded (EUR 50 million per constituent entity in the previous two fiscal years). The Federal Ministry of Finance points out that the provisions of the Austrian Federal Fiscal Code (Sec. 124, 131 and 138) remain unaffected; according to the provisions it has to be proved that prices between related entities meet the arm s length principle under Sec. 6 (6) Austrian Income Tax Act and Sec. 7 and 9 OECD-Model Tax Convention. Documentation in line with the TPDL and the TPDL-R can be drawn up voluntarily. In case Austrian constituent entities of multinational groups exceed the turnover threshold, a Master File as well as a Local File have to be created, even if there are only domestic intragroup transactions. Following the decree, in such case less documentation efforts would be required, as purely domestic transactions usually do not have to be documented in the Local File. EY International Tax Review, No. 01/2018 2

3 Austria: Information on the Transfer Pricing Documentation Law Domestic intragroup transactions usually do not have to be documented, however they have to be recorded as far as they have a direct or indirect effect on the determination and audit of the appropriate intragroup transfer price policy. Conclusion: The publication of the decree by the Federal Ministry of Finance leads to further clarification. However, further open questions remain unanswered. Our EY transfer pricing experts are happy to answer your questions regarding the application of the TPDL. Updated List of Countries with Comprehensive Administrative Assistance Income Tax Act Corporate Income Tax Act On 18 December 2017, the Austrian Ministry of Finance published an updated list of all states and territories with which Austria agreed on comprehensive administrative assistance (BMF /0538-IV/8/2017). Compared to the former list, Cook Islands, Guatemala, Lebanon, Malaysia, Marshall Islands, Pakistan, Panama, St. Lucia were added. The Austrian Ministry of Finance defines comprehensive administrative assistance based on the EU Directive 2011/16/EU, the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (from 1 January 2015), exchange of information clauses in tax treaties and tax information exchange agreements. Comprehensive administrative assistance is amongst others prerequisite for the tax exemption of third country portfolio dividends, for a foreign company to become an Austrian group member, for foreign loss carry forwards to be subject to retroactive taxation as well as for the tax deductibility of certain donations. As of 1 January 2018, there is a comprehensive administrative assistance between Austria and the following states and territories: Albania, Algeria, Andorra, Anguilla, Argentina, Armenia, Aruba, Australia, Azerbaijan, Bahrain, Barbados, Belgium, Belarus, Belize, Bermuda, Bosnia- Herzegovina, Brazil, British Virgin Islands, Bulgaria, Cameroon, Canada, Cayman Islands, Chile, China (People s Republic), Columbia, Cook Islands, Costa Rica, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Faeroe Islands, Finland, France, Georgia, Germany, Ghana, Gibraltar, Greece, Greenland, Guatemala, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Kazakhstan, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Malta, Macedonia, Malaysia, Marshall Islands, Mauritius, Mexico, Moldavia, Monaco, Montenegro, Montserrat, Morocco, Nauru, New Zealand, Netherlands, Nigeria, Niue, Norway, Pakistan, Panama, Philippines, Poland, Portugal, Qatar, Republic of Korea, Rumania, Russia, Samoa, San Marino, Saudi-Arabia, Senegal, Serbia, Seychelles, Singapore, Saint Kitts and Nevis, St. Lucia, Saint Maarten, Slovakia, Slovenia, South Africa, Spain, St. Vincent and the Grenadines, Sweden, Switzerland, Tadzhikistan, Taiwan, Thailand, Tunisia, Turkey, Turkmenistan, Turks and Caicos Islands, Uganda, Ukraine, United Kingdom, Uruguay, USA, Venezuela, Vietnam. EY International Tax Review, No. 01/2018 3

4 Updated List of Countries with Comprehensive Administrative Assistance The information (in German) is available under the following link: a07a8509afcd/ x.x.pdf Reporting obligations for certain payments under Sec. 109b Austrian Income Tax Act Income Tax Act If an Austrian entrepreneur effects payment to a foreign country for services rendered in Austria, he has the obligation to notify the Austrian tax authorities electronically about these payments under Sec. 109b Austrian Income Tax Act ( AITA ). With this regulation the Austrian tax authorities want to ensure the correct taxation in Austria as well as to provide information to foreign tax authorities that likely have the right of taxation. For payments made in the calendar year 2017, Austrian entrepreneurs have to notify the Austrian tax authorities electronically (via ELDA or Statistik Austria) by 28 February 2018 at the latest. The reporting requirement applies for independent personal services under Sec. 22 AITA (in particular professional services providers, supervisory board members, private foundation management board members and managing directors with a shareholding of more than 25%) rendered in Austria, agency services rendered by residents or agency services relating to domestic transactions, as well as commercial or technical advisory services rendered in Austria. A reporting requirement applies regardless of whether the commercial or technical advisory services or the agency services are rendered to a business or a private person. The commercial or technical advisory services require physical attendance in Austria. The reporting must contain the name and address of the service provider as well as the international country code of the respective country. In case of a corporation or a partnership without legal personality acting as a service provider, the main responsible individual (who has the responsibility for the services in Austria may also be more than one person) has to be declared additionally. Furthermore the service provider as well as the main responsible individual must provide their Austrian tax number or social security number. If an Austrian tax number or social security number does not exist, the VAT ID or the date of birth has to be reported. In addition the amount paid and the calendar year of the payment as well as the international country code of the recipient country have to be declared. A reporting is not necessary if the fees paid to the service provider within one calendar year do not exceed EUR 100,000.00, or if withholding tax under Sec. 99 AITA is withheld (and a relief at source is not applied), or the payment is made to a foreign corporation that is subject to a tax rate of at least 15% in its home country. EY International Tax Review, No. 01/2018 4

5 Austria: Expiry of the State Subsidy for Additional Employees Subsidies Since 1 July 2017, it has been possible to apply for a state subsidy to cover 50% of ancillary wage costs for additional full time employees in Austria (Beschäftigungsbonus). The new Austrian government recently decided to prematurely terminate the subsidy program with 31 January New applications have to be filed by 31 January 2018 at the latest. For further information on the state subsidy for additional employees, please see our International Tax Review No. 07/2017 dated 5 July 2017 and No. 13/2017 from 19 December OECD Developments EU Developments OECD Developments The Latest on BEPS 2 January 2018 The Latest on BEPS 18 December 2017 EU Developments CJEU rules German anti-treaty shopping rule infringes Parent-Subsidiary Directive and freedom of establishment Country Updates Argentina Argentina enacts comprehensive tax reform Argentine tax reform: A review of key provisions Australia Australian Tax Office releases further guidance regarding Cross-Border Related Party Financing and the Diverted Profit Tax Australian Taxation Office Cross-Border Related Party Risk Assessment Guide: A detailed review Austria New Austrian Government presents Tax Program OECD releases Austria peer review report on implementation of Action 14 Minimum Standards Bahrain Bahrain included in EU list of uncooperative jurisdictions for tax purposes EY International Tax Review, No. 01/2018 5

6 Country Updates Belgium Belgian Parliament adopts corporate tax reform Canada Finance Canada releases revised income splitting measures Canada Revenue Agency revises income tax Voluntary Disclosures Program China China announces withholding tax deferral treatment on direct reinvestment Colombia Colombia issues regulations on obligation to notify tax authorities about Country-by-Country report Denmark Danish Court rules PE created by construction activities effectively carried out through a fixed place in Denmark EU Advocate General issues opinion on Danish withholding tax treatment of dividends distributed to foreign investment funds Danish Court ruling gives rise to uncertainty in respect of certain requirements under Danish Tonnage Tax Act France French Parliament approves Finance Bill for 2018 and second Amending Finance Bill for 2017 OECD releases France peer review report on implementation of Action 14 Minimum Standards French second Amending Finance Bill for 2017 and Finance Bill for 2018 published France aligns transfer pricing documentation requirements with OECD Action 13 Master File and Local File Germany OECD releases Germany peer review report on implementation of Action 14 Minimum Standards Ghana Ghana extends National Fiscal Stabilization Levy and Special Import Levy EY International Tax Review, No. 01/2018 6

7 Country Updates Hong Kong Hong Kong introduces two-tier profits tax rates regime Hong Kong introduces tax and transfer pricing legislation to counter Base Erosion and Profit Shifting India Indian Tribunal rules guarantee fee is taxable in India as other income Italy OECD releases Italy peer review report on implementation of Action 14 Minimum Standards Italy approves 2018 Budget Law Italy enacts Web Tax and new PE definition Japan Japan releases 2018 tax reform outline Korea Korea enacts 2018 tax reform bill Luxembourg Luxembourg releases new guidelines on certificates of residence for UCIs OECD releases Luxembourg peer review report on implementation of Action 14 Minimum Standards Luxembourg Parliament approves 2018 Budget Law Malaysia Malaysia announces partial enactment of 2018 budget proposals Norway Norwegian Parliament approves 2018 Fiscal Budget; Implementation of SAF-T in 2020 Panama Panama modifies deadlines for FATCA and CRS purposes EY International Tax Review, No. 01/2018 7

8 Country Updates Portugal Portugal releases official form for compliance with Country-by-Country Reporting notification obligation Puerto Rico Puerto Rico s Treasury Department issues guidance on automatic waiver from withholding at source on payments made for services performed in 2018 Russia The Constitutional Court Sets Out its Position on the Accountability of Individuals for Fiscal Damage Caused by a Company The Russia-Brazil Double Tax Treaty Has Entered into Force and Will Apply from 1 January 2018 The List of Countries with Which Russia Will Begin to Exchange Tax Information Has Been Published Changes in the immigration requirements Final United States Federal Tax Reform Bill South Africa South Africa publishes Second Draft Carbon Tax Bill for public comment South African Revenue Service publishes list of non-qcaa jurisdictions Spain Spain and US sign Country-by-Country Reporting automatic exchange of information agreement Taiwan Taiwan increases withholding tax rate for nonresident recipients without fixed place of business in Taiwan Thailand Thai Cabinet approves draft transfer pricing act Turkey Turkish Constitutional Court ruling addresses need for predictability and certainty of tax provisions EY International Tax Review, No. 01/2018 8

9 Country Updates United States Report on recent US international tax developments 12 January 2018 Report on recent US international tax developments 5 January 2018 Report on recent US international tax developments 29 December 2017 Report on recent US international tax developments 22 December 2017 US tax reform: A guide to income tax accounting considerations US House and Senate release the Conference Report on the Tax Cuts and Jobs Act US Tax Cuts and Jobs Act and its impact on technology sector US Tax Cuts and Jobs Act significantly affects retail and consumer products industry US proposed regulations may alleviate foreign currency tax asymmetries for CFCS and provide new mark-to-market election for certain foreign currency transactions US Tax Cuts and Jobs Act and its impact on the energy sector US IRS issues guidance on transition tax on foreign earnings US Treasury grants yet another extension of time for reporting signature authority (FBAR, Form 114) over certain foreign financial accounts US IRS suspends application of new Section 1446(f) withholding requirement on dispositions of publicly traded part US enacts comprehensive tax reform; revamps international tax rules Tax accounting among top issues following enactment of US tax reform IRS issues guidance on transition tax on foreign earnings IRS proposed regulations may alleviate foreign currency tax asymmetries for CFCs, provide new mark-to-market election for certain FX transactions IRS suspends withholding obligations under TCJA s new Section 1446(f) IRS issues proposed regulations on international rules under BBA partnership audit regime OECD releases second batch of peer review report on BEPS Action 14 OECD releases first annual peer review report on BEPS Action 5 OECD invites taxpayer input on fourth batch of peer reviews of BEPS Action 14 Uruguay Uruguay s Executive Power issues Decree establishing modifications to shared service centers regime Uruguay enacts changes to Free Trade Zone regime Zimbabwe Zimbabwe presents 2018 budget proposals EY International Tax Review, No. 01/2018 9

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