Tax & Legal News in English October 2025

ECJ Opinion on ancillary services in the accommodation sector

The Opinion of Advocate General Ćapeta confirms that ancillary services provided free of charge are not subject to VAT, while additional services provided for a fee may be taxed separately if they are economically separable and do not form a single unit with the hotel service. Furthermore, the Opinion clarifies that it is at the discretion of the respective Member State to decide whether the reduced VAT rate applies to the respective ancillary services provided for consideration. In the opinion of Advocate General Ćapeta, the German allocation requirement laid down in Section 12(2)(11) of the German Value Added Tax Act (dUStG) is compatible with EU VAT law. It remains to be seen how the ECJ will rule.

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Dismissal protection provisions are only applicable if a business is located in Austria

The Austrian Supreme Court has clarified that the provisions on protection against dismissal only apply to employees who work for a foreign employer if there is a business located in Austria.

The ruling was prompted by the case of an employee who worked permanently from Vienna but was organizationally and hierarchically integrated into the employer’s business in Germany. The employee was dismissed in 2023 and requested that the dismissal be declared invalid due to a frowned upon motive and social unlawfulness. As the plaintiff performed his work in Austria, he asserted the applicability of the ArbVG.

In cross-border cases, an employment contract is subject to the law of the country in which or from which the employee usually performs his work (contractual statute). In its decision, the Austrian Supreme Court was confronted with the question of whether the provisions of the protection against dismissal follow this contractual statute.

The challenge of dismissal requires the integration of an employee into a business with at least five employees. Subsequently, the court had to assess whether the assertion of protection against dismissal requires the existence of a business in Austria.

The Austrian Supreme Court ruled that the provisions on protection against dismissal are to be assigned to the termination of the employment contract and therefore follow the contractual statute. Furthermore, the court clarified that the protection against dismissal is linked to the existence of a business in Austria and that the absence of this requirement cannot be reconciled with the ArbVG.

The present decision creates the necessary legal certainty in times of increasing cross-border activity of employees and clearly clarifies several related issues for foreign employers.

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Preliminary ruling regarding VAT exempt intra-community supplies

In its decision of September 18, 2025, RE/2100001/2025, the BFG referred four questions concerning the VAT exemption of intra-community supplies to the ECJ. In particular, the question is whether the communication of the purchaser's VAT identification number has been a material requirement for the VAT exemption since the implementation of the Quick Fixes in 2020. Based on this, the follow-up questions deal with a possible input VAT deduction and a subsequent correction. The decision of the ECJ remains to be seen.

The question of whether the VAT identification number is a material prerequisite for the VAT exemption of intra-community supplies has far-reaching consequences in practice. The upcoming ECJ ruling will therefore play a key role in removing uncertainties and creating legal certainty for the VAT treatment of intra-community supplies in the European Union.

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EU proposal to counter global steel overcapacity

On 7 October 2025, the European Commission (EC) published its proposal for a regulation of the European Parliament and of the Council addressing the detrimental trade-related effects of global overcapacity on the steel market of the European Union (EU). The EU Commission's new proposal for the safeguard measures for steel, which expire in 2026, proposes a significant reduction in the quantities that can be imported under tariff quotas and an increase in the import tariffs applicable thereafter to 50% for steel products. This change will ease the burden on the EU steel industry. However, the introduction of new rules of origin will result in increased compliance costs. Importers of steel products should clarify with their suppliers at an early stage who will pay any higher import costs and whether the suppliers will receive all necessary documentation.

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Higher Administrative Court request for a preliminary ruling on rectifying triangular transactions

With regard to the possibility of rectifying unsuccessful triangular transactions, retroactive rectification (ex tunc effect) is ruled out according to the current preliminary ruling request of the Higher Administrative Court (VwGH) with reference to the ECJ. The Higher Administrative Court has asked the ECJ whether a subsequent adjustment of invoices would allow for the ex nunc applicability of the simplification rule for triangular transactions and, if so, under what conditions. The decision of the ECJ and the subsequent decision of the Higher Administrative Court are eagerly awaited, as the Austrian tax authorities currently take a restrictive position and completely rule out any correction.

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Review of the UBO compliance by the Austrian UBO register authority

The obligations arising from the Austrian UBO register regulations (“WiEReG”) are comprehensive. The Austrian UBO register authority has extensive rights to review the UBO compliance. Those rights were continuously expanded in line with the reporting obligations. Due to the threatened penalties not only for wrongdoings with regard to the reporting itself, but also concerning the retention obligations for the UBO documentation, the respective entities have to pay particular attention to fulfill the UBO compliance obligations. Currently, we notice an increase in such reviews of the UBO-compliance by the UBO register authority.

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Temporary increase of investment allowance

For the period from November 1, 2025, to December 31, 2026, a temporary increase of the investment allowance (Investitionsfreibetrag, IFB) was decided as a measure to strengthen the economy and boost investments. The IFB will temporarily rise from 10% to 20%, and in the area of ecological investments from 15% to 22%.

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