Tax & Legal News in English September 2026

EU Tax Omnibus: Commission Proposes Direct Tax Reform

On 24 June 2026, the European Commission published its Tax Omnibus proposal, providing for targeted amendments to six EU directives in the field of direct taxation. Further key measures include relief under the interest limitation rule, a significant restriction of the CFC regime for groups within the scope of the Pillar Two rules, a common minimum standard for the immediate expensing of R&D-related tangible assets, and the removal of minimum shareholding requirements under the Parent-Subsidiary Directive and the Interest and Royalties Directive.

The proposal also seeks to abolish withholding tax on qualifying cross-border dividends, interest and royalties between EU companies, with relief otherwise available under the FASTER Directive or national refund procedures.

As unanimous approval  by the Council of the European Union is required, it remains uncertain whether, and to what extent, the proposed measures will ultimately be adopted in their current form.

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OGH on banks’ advisory duties in commercial lending 

In a recent decision (1 Ob 40/26b), the Austrian Supreme Court (“OGH”) reaffirmed that banks are generally under no obligation to assess the commercial viability of a borrower’s business project or to warn experienced entrepreneurs about the economic risks associated with their ventures when granting loans.

The case concerned a borrower who had obtained several loans to finance a horse breeding operation. After the business failed and the loans could no longer be serviced, the borrower argued that the bank should never have approved the financing. The OGH dismissed this argument: since the borrower had presented herself as an experienced entrepreneur with decades of relevant experience and had submitted a credible liquidity plan prepared by her tax adviser, the bank was entitled to rely on that information without conducting its own assessment of the project’s viability. The court also held that the borrower could not retroactively claim consumer status, as her own representations indicated that she was already operating in the same line of business. The ruling reinforces the principle that, in commercial lending, entrepreneurs bear the primary responsibility for the success or failure of their business ventures, unless the bank has expressly assumed a financing advisory role.

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New Double Tax Treaty between Austria and Argentina

The new Double Tax Treaty between Austria and Argentina is - in simplified words - applicable from 1 January 2027. It ends a long period without a Double Tax Treaty between the two countries. Large parts of the treaty are based on the OECD Model convention. However, several elements of the UN Model convention are also incorporated. Overall, the treaty provides a modern framework increasing legal certainty for cross-border activities between Austria and Argentina.

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General Court on the non-taxability of transfers of assets within the meaning of Article 19 of the VAT Directive

The judgment of the General Court regarding case T‑413/25 (“Peckeger”) clarifies that, where a Member State exercises the option under Article 19 of the VAT Directive, the non-taxation of transfers of assets must apply generally and cannot be restricted to specific types of restructuring. An exception is only possible to prevent distortion of competition, tax evasion or avoidance. The Court further confirms that a taxable person may rely directly on Article 19 before national courts if the Member State has implemented this option in a way that is contrary to EU law. In the specific case of the contribution of immovable property to a company without the grant of new shares, the transaction was not regarded as a taxable supply for consideration, but as a deemed supply by way of withdrawal for non-business purposes.

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Construction Cartel – Cartel damages via Contractual Penalties?

The Vienna Court of Appeal (Oberlandesgericht Wien) dismissed a claim for contractual penalties brought by a non-profit housing association against a construction company. The claim was based on a penalty clause in the claimant's general terms and conditions, designed to sanction cartel conduct during tender proceedings even where the contract is awarded to another bidder.

The Court confirmed that civil courts are bound by final decisions of the Cartel Court in follow-on proceedings — a binding effect that relieves the claimant of the burden of proving the infringement itself — and found that the construction projects at issue were covered by the Cartel Court's findings.

Nevertheless, the claim failed at a fundamental threshold of general contract law: the penalty clause — sanctioning pre-contractual conduct in the competitive process, triggered by a subsequent competition law conviction, and applicable even where the bidder was not awarded the contract — constituted an unusual and unexpected extension of the bidder's obligations that could not reasonably have been anticipated, particularly in the context of an ongoing commercial relationship. The clause therefore never validly became part of the contract, and the incorporation control takes precedence over any substantive review of the clause's content.

The case illustrates that claimants in cartel damages cases continue to face significant challenges. This applies even where a competition law infringement has been stablished by a court decision with binding effect and where contact documents contain a contractual penalty clause sanction cartel conduct. The decision carries significance well beyond the context of cartel damages: it reaffirms that any party using general terms and conditions must draw its counterpart's express and unequivocal attention to newly introduced or materially amended clauses in an ongoing business relationship, failing which such clauses will not become part of the contract.

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VAT Treatment of Company Cars: Austrian Administrative High Court clarifies the requirements for consideration

The Austrian Administrative High Court recently ruled that the contractual granting of a right to use a company car for private purposes does not, in itself, constitute a taxable supply for consideration. A direct link between the provision of the vehicle and consideration provided by the employee is required. Where no specific payment for private use has been agreed, the assessment must consider in whose primary interest the vehicle is provided and how it is actually used for business and private purposes. The decision confirms that the VAT treatment of company cars requires an assessment of the specific legal and economic circumstances of the individual case.

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