Tax & Legal News in English July & August 2025

Update TP Guidelines: relevant changes

As part of the 2025 maintenance decree of the Austrian Transfer Pricing Guidelines 2021, the Ministry of Finance included clarifications regarding the transfer of assets and business activities in the course of a restructuring and regarding the establishment of a permanent establishment. In addition, the Ministry of Finance has rejected unilateral relief through a request for counter-adjustment in according with § 48 Abs 5 Federal Fiscal Code.

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The Necessity of Tax Compliance Management Systems: Insights from a Tax Appeals Court Decision

The decision RV/2100223/2025 by the Tax Appeals Court (BFG) dated 2 June 2025, illustrates the fiscal consequences for entrepreneurs resulting from an inadequately organized Tax Compliance Management System (TCMS), particularly regarding managing deadlines for compliance obligations. It highlights the essential role a functioning TCMS plays in avoiding fines and proving the absence of gross negligence in case of non-compliance, namely that a meticulously documented TCMS is integral to responsible corporate governance, minimizing fiscal risks and aiding in audits or legal disputes if properly executed. As tax authorities and courts increasingly consider the presence of a TCMS a strong compliance indicator, businesses are advised to safeguard their tax processes through systematic implementation.

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Notification of illness via iMessage may fulfil employees' notification obligation

The Austrian Supreme Court, in line with its previous jurisdiction, has ruled that a notification of illness via iMessage is an appropriate notification of absence, even if the employee does not have a confirmation of transmission.

The ruling was prompted by the case of an employee, who sent several sick notes via iMessage to his employer in the period from 7.6.2023 to 1.7.2023. The employer and the employee have repeatedly communicated via iMessage in the past. When the employee handed in another certificate of incapacity for work in person, he received a pay slip with the note “Resignation 14.6.2023”. The employer therefore terminated the employment contract unilaterally, whereupon the employee requested compensation for termination.

It has already been clarified in previous cases that employees must be able to expect that the employer will take note of their notification under normal circumstances, but that actual knowledge is not required. However, sending a message does not constitute proof of receipt. If employees refer to a message requiring receipt, they must claim and prove that it was received. Nevertheless, according to previous jurisdiction, a notification of illness by text message is a proper notification of absence, even if there is no confirmation of transmission.

In this specific case, the Austrian Supreme Court therefore ruled that the employee had not culpably breached the duty of notification, especially as the use of iMessage corresponded to typical communication with the employer. The employee is therefore not obliged to obtain or request confirmation of receipt, as this would exceed his duty of care. However, the Supreme Court clarifies that the question of whether employees may rely on the receipt of their message always depends on the circumstances of the individual case.


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Tax Appeals Court rules to determination of the credit for interim tax paid

Private Foundations are subject to the interim tax system; interim tax paid can be credited at the level of the private foundation in accordance with taxable contributions to beneficiaries. In its current ruling, the Tax Appeals Court has determined that the assessment basis for the withholding tax credit must be positive. Contrary to the opinion of the private foundation, negative income does not result in a credit for withholding taxes paid in previous years.

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Important changes in FinanzOnline from 1 October 2025

From 1 October 2025, access to FinanzOnline will only be possible with two-factor authentication. Logging in with just a username and password will no longer be allowed.
If you do not use ID Austria to log in, you will need to enter your usual FinanzOnline credentials plus a second security factor (e.g. a one-time code generated by an app or software). For businesses and tax advisors, this second factor can also be integrated into existing software solutions, so that no additional hardware (such as a company smartphone) is required.
In addition, starting on 1 October 2025, the obligation to use electronic delivery via FinanzOnline will be tied to the obligation to file an annual VAT return (instead of the current link to VAT advance returns). This means that the requirement will also apply to small businesses that have opted for VAT liability.

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Reclaim of COVID-19 Subsidies: Constitutional Concerns

The provisions of the COFAG Reorganization and Settlement Act (COFAG-NoAG) concerning the reclaim of unduly granted COVID-19 subsidies and the associated interest charges raise serious constitutional concerns for several reasons. In particular, the complete exclusion of any possibility to waive a reclaim on discretionary grounds appears highly disproportionate — especially considering that subsidy recipients were often entitled to rely on the legality of the funding based on positive audits conducted by the former COFAG and disposed of the funds in good faith. Moreover, reclaimed subsidies are subject to retroactive interest, with interest periods of up to 14 years. Such significant interference with existing legal positions, without compelling justification, raises substantial concerns regarding the principles of equality before the law and legitimate expectation. Should the Constitutional Court (VfGH) annul provisions of the COFAG-NoAG, the resulting (quasi-)precedent effect may also benefit appeal proceedings already pending before the Tax Appeals Court (BFG) or Administrative High Court (VwGH) — meaning that filing a legal remedy may prove worthwhile even if no sufficient grounds to contest the reclaim exist under the current law in force. The initiation of a constitutional review procedure by the Constitutional Court (VfGH) remains to be awaited.

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