Tax & Legal News in English May 2026

BFG on the Early Termination of Substance Profit Participation Rights

The Austrian Federal Fiscal Court (BFG) ruled in its decision of 2 March 2026 (RV/7103837/2023) that an excess termination payment received upon the early termination of a substance profit participation right (Substanzgenussrecht) may qualify for the participation exemption under Sec10 para 1 no 3 Corporate Income Tax Act. Contrary to the tax authorities’ long-standing view, the Federal Fiscal Court held that such an early termination does not automatically constitute a deemed partial liquidation, particularly where neither business assets are realised nor business operations are discontinued or restricted. The decision therefore clarifies that, to the extent the payment does not qualify as a tax-neutral repayment of capital, it may still be treated as a tax-exempt participation return. Since the BFG has allowed an ordinary appeal and, in the meantime, an official appeal has been filed, it remains to be seen whether  the Austrian Administrative High Court (VwGH) will uphold this line.

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Judgment on Ancillary Services in the Accommodation Sector – Confirmation of the Apportionment Requirement

Taxpayers operating in Hungary have faced ongoing uncertainty regarding the future of the framework software provided by the Hungarian authorities (ÁNYK system) which is the primary platform for the preparation and submission of Hungarian tax returns. However, the recent announcement by the Hungarian Tax Authority has brought clarity: the ÁNYK system will be decommissioned as of 1 January 2027, meaning it will no longer be possible to prepare submit tax returns through this platform. This change affects every Hungarian taxpayer since the established processes for tax reporting should be replaced. The most significant challenge lies in VAT reporting due to the complexity of the requirements. Also, Austrian companies must increasingly prepare for the transition to eVAT in relation to tax matters in Hungary. This may require significant adjustments to their ERP systems. In this changing landscape, investing in a long-term, future-proof solution is crucial, bearing in mind that use of the eVAT system could become mandatory from 2027.

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Update restructuring guidelines part 1

On 19 December 2025, the Austrian tax authorities published the 2025 update to the Austrian Reorganization Tax Guidelines. This update incorporates amendments introduced in connection with the new Reorganisation Notification Regulation (UmgrMV) issued by the Austrian Ministry of Finance. It also includes additional changes and clarifications, which will be discussed in more detail in the second part of this tax news.

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Update restructuring guidelines - Part 2

On 19 December 2025, the Austrian tax authorities published the 2025 update to the Austrian Reorganization Tax Guidelines. While the first tax news article focused in detail on the structured reporting of reorganizations, this second part of the series addresses the most relevant amendments and clarifications concerning the contribution of special shares in a FlexCo, issues arising in the retroactive period, the contribution of co-entrepreneurship interests, and the concept of an “other withdrawal” in the context of subsequent reorganizations.

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Latest from the ECJ: Factoring and Its VAT Implications

With its judgment in Case C 232/24 Kosmiro of 23 October 2025, the European Court of Justice ruled that both non-recourse factoring (sale of receivables with risk assumption) and recourse factoring (financing against pledging without risk assumption) constitute a single, indivisible supply of receivables collection. Accordingly, the entire service is subject to VAT, and no part of it falls under the exemption provided by Article 135(1)(d) of the EU VAT Directive (EU MwStSystRL) or § 6(1) Z 8 lit c of the Austrian VAT Act (UStG).
According to the ECJ, factoring services are, in principle, subject to VAT, as they economically consist in the collection of receivables. The ECJ rejects a split of such services into a taxable debt collection component and an exempt credit granting component. Affected businesses are therefore advised to review the VAT treatment of their factoring services considering the current case law. This also has implications for input VAT deduction. In particular, entrepreneurs applying an input VAT apportionment (pro rata) method may benefit from this decision.

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Austrian Federal Fiscal Court on Share Disposal: Transfer of Beneficial Ownership Prior to Closing

The Austrian Federal Fiscal Court (BFG) was called upon to determine the point in time at which beneficial ownership is deemed to pass to the purchaser in the context of a share purchase transaction, where a corporate reorganization occurs between signing and closing. To assess this issue, the BFG examined whether voting rights, profit participation rights, and the ability to divest the shares were transferred to the buyer upon the completed reorganization or whether this occurred only upon closing.
The decision clearly shows that the transfer of beneficial ownership in share sales must be assessed in light of the contractual terms of the agreement, the respective interests of the seller and the buyer, and the actual possibilities for influence.

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FASTER Directive: Further Clarification Regarding Market Capitalization

On 21 April 2026, the publication of the Delegated Regulation (EU) 2026/110 in the Official Journal of the European Union formalized another key building block for the implementation of the FASTER Directive (EU) 2025/50. In our FSI Tax News No. 1/2025 of 31.1.2025 (Änderungen FASTER-Richtlinie | FSI | Deloitte Österreich), we have already reported extensively on the FASTER Directive. The new regulation sets out the technical methodology for calculating the market capitalization and market capitalization ratio of the EU Member States, thus providing clarity for the application of the thresholds provided for in the Directive.

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Austria: New Consumer Credit Act (VKrG 2026) – Implementation of the new Consumer Credit Directive (EU) 2023/2225

The upcoming implementation of the EU Consumer Credit Directive (2023/2225), effective as of November 20, 2026, introduces significant changes to the legal landscape of consumer lending in Austria. The primary objective is to modernize consumer protection and adapt to digital market developments.
Central to the reform is an expanded scope combined with enhanced consumer protection rules. The new legislation will now also include interest-free loans, microloans (under EUR 200), and "Buy Now Pay Later" (BNPL) models. Furthermore, it introduces stricter requirements on advertising, digital transparency, creditworthiness assessments and overdrafts, as well as mandatory leniency measures prior to enforcement proceedings and updates to withdrawal rights.
Amendments to the Austrian Banking Act grant the Financial Market Authority (FMA) extensive supervisory powers, including the authority to conduct on-site audits and impose administrative fines.
While banks must navigate increased administrative requirements and adapt their advertising, credit checks, and IT systems by late 2026, consumers benefit from higher transparency and better safeguards against financial distress. Ultimately, these measures aim to achieve a long-term reduction in credit risk and foster a more stable financial environment.

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