Austria: Notification obligation regarding Country-by- Country Reports (CbCR) by 31 December 2017

Transcription

1 No. 12/ November 2017 International Tax Review Current information on international tax developments provided by EY Austria Austria: Notification obligation regarding Country-by- Country Reports (CbCR) by 31 December 2017 Content 01 Austria: Notification obligation regarding Countryby-Country Reports (CbCR) by 31 December Austrian Supreme Administrative Court: Change of Ownership Rule applies despite Consistent Indirect Shareholder Structure 03 Austrian group taxation: issues before year end 04 Constitutional Court: Online advertising not covered by Austrian advertising tax 04 OECD Developments 04 EU Developments 04 Country Updates The introduction of the Transfer Pricing Documentation Law (TPDL) in 2016 established special transfer pricing notification obligations for entities resident in Austria. The 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. 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 TPDL. The competent Austrian tax office has to be informed on an annual basis by the last day of the fiscal year for which a CbCR is prepared whether the entity resident in Austria is the ultimate parent entity of an MNE group or the surrogate parent entity of an MNE group that files the CbCR with the Austrian tax office. If the Austrian entity is neither the ultimate parent entity nor the surrogate parent entity of an MNE group that files the CbCR, the Austrian tax office has to be informed about the identity and residence of the reporting entity (i.e. the group entity that prepares and files the CbCR in its state of residence). To standardize the notification process, the Austrian Ministry of Finance published the form VPDG 1 in its form database (see link below). M& ClFRM_STICHW_ALL=VPDG1+&searchsubmit=Suche

2 Austria: Notification obligation regarding Country-by- Country Reports (CbCR) by 31 December 2017 If the fiscal year of the entity is the calendar year, the notification for 2017 has to be submitted to the competent Austrian tax office by 31 December An electronic transmission via FinanzOnline is possible. Please do not hesitate to contact us in case of any questions regarding the reporting obligation. Austrian Supreme Administrative Court: Change of Ownership Rule applies despite Consistent Indirect Shareholder Structure Corporate Income Tax Act On 13 September 2017, the Austrian Supreme Administrative Court (2015/13/0007) found that only the change of direct shareholders is relevant for the application of the change of ownership rule. Under Sec 8/4/2 Austrian CIT Act, tax loss carry forwards are forfeited, in case of substantial changes in the economic, organizational and shareholder structure within a certain timely context, in case there is a connection ( overall plan ) between the single changes. An exemption rule applies for certain restructurings. Facts In a tax audit, the purchase of a company was qualified as a change of ownership leading to the forfeiture of tax loss carry forwards because the shareholder structure, beside the organizational and economic structure, changed significantly. Also after the sale of the shares, two of the three former direct shareholders still held shares in an intermediate company and remained indirect shareholders. No change of ownership Federal Fiscal Court Following a complaint, the Austrian Federal Fiscal Court held that the term shareholder structure includes not only the direct shareholders, but also the whole indirect shareholder structure. For the Federal Fiscal Court, the interposing of a company between the original shareholders and the company does not lead to a complete change of the shareholder structure. The Federal Fiscal Court pointed out that the shareholders decision-making authority remained in the same hands as before. Change of ownership Supreme Administrative Court The Austrian Supreme Administrative Court did not follow the Austrian Federal Fiscal Court and held that a change at the direct shareholder level is generally of relevance for the application of the change of ownership rule. The Supreme Administrative Court did not explicitly refer to a case where the direct shareholders remain the same, although there is a substantial change in the indirect shareholder structure. Following the argumentation of the Court, the change of ownership rule should not apply in such cases. For the analysis of implications for your individual case, please contact your EY tax advisor. EY International Tax Review, No. 12/2017 2

3 Austrian group taxation: issues before year end Corporate Income Tax Act Under the Austrian group taxation regime, tax losses of group members can be offset against tax profits of other group members. Main prerequisite is that there is a participation of more than 50% of the share capital and the majority of voting rights during the whole fiscal year. If a tax group should be established or if an already existing tax group should be extended for the tax year 2017 (for groups with balance sheet date 31 December 2017), the group application forms have to be verifiably signed by 31 December 2017 at the latest. Furthermore the signed group application forms have to be filed with the Austrian tax authorities within one month after signing. Depreciations of participations in subsidiaries made before the subsidiary joined the tax group remain tax deductible and have to be spread over seven years for tax purposes. If foreign subsidiaries are currently in a loss position and if under foreign tax law tax loss carry forwards are limited timely, the inclusion of the foreign subsidiaries into an Austrian tax group should be considered. Only foreign entities resident in countries with which Austria has agreed on comprehensive administrative assistance can be included into a tax group. Losses of foreign group members must be calculated based on Austrian tax law. Foreign losses calculated under Austrian tax law may be higher than under foreign tax law. However, the deductibility of such losses is limited to the actual losses calculated under foreign tax law. The utilization of losses of foreign group members is limited to 75% of the domestic group income. Exceeding losses are included in the loss carry forwards for subsequent years. Depreciations of participations in group members (to their lower fair market value) are tax-neutral at the level of the parent company. If a new tax group should be established in 2018, potential depreciations of future group members should be considered when drawing up the financial statements Goodwill amortization is no longer possible for share deals after 28 February Open amortization amounts ( fifteenths ) basically remain tax deductible. The cancellation of an existing tax group in 2017 should be considered, if participations in group members have to be depreciated in the financial statements If group members suffer high losses in 2017, which cannot be offset against taxable profits of other group members, it may be advisable to (partly) cancel the existing tax group. A new tax group could then be established as soon as the companies are in a profit situation again. Group members can completely offset their taxable income against pre-group tax loss carry forwards (the 75% limitation does not apply). A tax group must exist for at least 3 entire fiscal years before it is cancelled. Otherwise CIT will be reassessed as if the tax group never existed. When establishing a new tax group, a new three year period will start. EY International Tax Review, No. 12/2017 3

4 Constitutional Court: Online advertising not covered by Austrian advertising tax Advertising Tax On 12 October 2017, the Austrian Constitutional Court (E 2025/ ) declined complaints of newspaper publishers and radio stations against the Austrian advertising tax. The reason for the complaints was that under current legislation, online advertising is not subject to 5% Austrian advertising tax (Werbeabgabe). The Constitutional Court stated that it is at the discretion of the legislator not to cover online advertising services, which are often rendered by non-resident service providers, in contrast to advertisement in newspapers, radio or television. OECD Developments EU Developments OECD Developments The Latest on BEPS 6 November 2017 The Latest on BEPS 23 October 2017 OECD holds second public consultation on attribution of profits to PEs and profit splits EU Developments European Commission opens State aid investigation into UK CFC rules Country Updates Argentina Argentine Executive Power proposes new comprehensive tax reform Barbados Barbados conducting review on OECD-designated preferential regimes Belgium Belgian Government approves draft law on corporate tax reform including 100% participation exemption Brazil Brazil amends tax rules of certain investment funds EY International Tax Review, No. 12/2017 4

5 Country Updates Cambodia Cambodia issues new transfer pricing compliance rules and documentation requirements New transfer pricing compliance rules and documentation requirements Canada Canada Revenue Agency issues 2016 APA Program Report Canadian Government revises private company tax reform proposals China China revises withholding tax compliance requirements for nonresident enterprises China issues 2016 Advance Pricing Agreement Annual Report Costa Rica Costa Rican tax authorities announce dates to start complying with mandatory use of electronic vouchers Costa Rica updates income tax brackets for tax year 2018 Costa Rica confirms 8% withholding tax for investments in securities Cyprus Cyprus-Iran Double Tax Treaty to come into effect on 1 January 2018 Denmark Danish Government agrees to ease taxes on investments in mutual investment funds for Danish individuals and foreign investors Danish Tax Board rules permanent establishment created by interrelated construction projects El Salvador El Salvador approves tax amnesty program El Salvador Tax Authorities publish revised list of tax havens for 2018 France French Government issues draft Amending Finance Bill for 2017 EY International Tax Review, No. 12/2017 5

6 Country Updates Germany Germany issues final guidance on classification of cross-border software and database use payments for withholding tax purposes Ghana Ghana proposes electronic system for tax exemption Ghana Revenue Authority launches national tax campaign Ghana issues 2018 Budget Statement and Economic Policy Hong Kong Hong Kong releases new practice note on concessionary tax regime for qualifying aircraft leasing activities Hungary Transfer pricing documentation requirements in Hungary are changing significantly India Indian Tax Administration releases final rules on Country-by-Country reporting and Master File implementation Indian Apex Court rules outsourcing of services by US company to its Indian subsidiary does not constitute a PE Indian Apex Court rules closely held company s issuance of loans to nonshareholder is not taxable as deemed dividend Indonesia Indonesia: Country-by-Country reporting update Italy Italian Tax Authorities issue guidelines on tax treatment of carried interest Malaysia Malaysia announces 2018 budget and WHT exemption order for service fees paid to nonresidents Mexico Mexican Supreme Court rules taxpayers will have to file accounting records for January 2015 and onwards EY International Tax Review, No. 12/2017 6

7 Country Updates The Netherlands European Court of Justice AG opines that the Netherlands to apply a per-element treatment for Dutch fiscal unity regime New Zealand New Zealand s incoming Government to prioritize International tax reforms Nigeria Central Bank of Nigeria issues publication on repatriation of export proceeds Nigeria presents 2018 Budget Norway Norway clarifies scope of new withholding tax regulations for shares not registered in VPS Oman Oman joins BEPS Inclusive Framework Poland Polish Ministry of Finance identifies cases where use of dividend WHT exemption may be subject to GAAR Poland: Advanced Pricing Agreement to remove new limitation on tax deductibility of intra-group charges Russia France Imposes New Beneficial Ownership Requirements Russian State Duma adopts draft law on BEPS Action 13 implementation The Tax Authorities Have the Power to Exclude a Company from the Register of Legal Entities if its Details Are Incorrect Slovakia New legislation on capital funds Amendment to the Commercial Code and its intended impact on business combinations South Africa South Africa s Minister of Finance delivers Medium Term Budget Policy Statement, 2017 EY International Tax Review, No. 12/2017 7

8 Country Updates United Kingdom OECD releases the United Kingdom peer review report on implementation of Action 14 minimum standards United States Report on recent US international tax developments 17 November 2017 Report on recent US international tax developments 10 November 2017 Report on recent US international tax developments 3 November 2017 Report on recent US international tax developments 27 October 2017 US international tax provisions and implications of the Tax and Jobs Act US House tax reform bill would affect banking and capital markets US Tax Cuts and Jobs Act offers mixed results for the technology sector US House tax reform bill could result in significant changes for Media & Entertainment industry US House tax reform bill would significantly affect life sciences sector US House tax reform proposal would significantly affect retail and consumer products industry US Senate Finance Committee Chairman s Mark of the Tax Cuts and Jobs Act: Energy sector implications US Congress JCT releases explanation of international provisions of Senate tax reform proposal US Unified Framework for Fixing Our Broken Tax Code International provisions US IRS and Treasury s Priority Guidance Plan contains several new financial services projects US Treasury and IRS Priority Guidance Plan shifts focus to reducing burdens and complexity House Ways and Means tax reform bill would revamp US international tax system Treasury outlines future actions on international regulations under executive order review Treasury intends to delay application of final regulations under Section 987 by one year; immediate pre-transition considerations remain for taxpayers Treasury / IRS Priority Guidance Plan shifts focus to reducing burdens and complexity, significant changes expected to several 2016 international regulations US District Court holds Treasury violated Administrative Procedures Act in issuing new anti-inversion rule with immediate effective date OECD publishes two handbooks on Country-by-Country Reporting OECD releases progress report on preferential regimes under BEPS Action 5 EY International Tax Review, No. 12/2017 8

9 Country Updates Uruguay Uruguayan Tax Authorities issue resolution on affidavit that must be submitted for import/export transactions EY International Tax Review, No. 12/2017 9

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