Tax & Legal News in English | December 2024

No Liability for Loss of Bitcoins on Trading Platform

The Austrian Supreme Court confirmed in its recent decision that the transfer of bitcoins is not a payment service within the meaning of the ZaDiG 2018. Customers of crypto trading platforms can therefore not rely on the liability provisions of the ZaDiG 2018 and its further requirements, such as two-factor authentication.

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Deductibility of "manager salaries"

In 2014, the legislator introduced a ban on the deduction of so-called executive salaries to strengthen the fairness aspect of tax law. As a result, expenses for work or services that exceed the annual salary limit of EUR 500,000 are no longer tax deductible. The remuneration is generally used to determine deductibility, whereby explicit regulations for determining the assessment basis must be considered.  For corporate groups, additional rules apply that govern how this remuneration is divided among different group companies and how internal group payments are handled. In some cases, the EUR 500,000 limit must be split proportionately.

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Stamp Duty on rental agreement extensions 

The Austrian Administrative High Court  ruled on 10 April 2024, that an addendum to a rental agreement, which extends the term of an existing agreement, is to be regarded as an independent legal agreement in terms of stamp duty. The stamp duty calculation is thereby based on the underlying contractual agreement. 

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New thresholds for companies: Reduced bureaucracy ahead 

Austria´s new „UGB Threshold Regulation “, effective January 1, 2024, introduces higher thresholds for classifying  companies into size categories. The balance sheet and revenue limits will increase by around 25 %, while the employee count threshold remains unchanged. This reform aims to align with economic developments and inflation adjustments. The changes reduce administrative burden and lower compliance costs for many companies subject to financial reporting requirements. Key impacts include simplified reporting obligations, the removal of audit requirements and fewer compliance demands. Reclassification depends on meeting two out of three criteria – balance sheet total, revenue, and employee count – over two consecutive years, providing stability for businesses despite short-term fluctuations. Companies are advised to review their classification and adjust their processes to fully benefit from the reform..

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Changes in VAT in other EU countries

Austrian companies that carry out and receive VAT transactions in Estonia, Finland, Italy, Romania, Slovenia and Slovakia must check whether there is a need for action in the area of VAT as a result of the changes from 2024 and subsequent years. For example, care must be taken to ensure that the correct (new) VAT rates are used or that the suppliers use them and that the compliance, reporting and documentation obligations are met accordingly. In Slovakia, the VAT group can be formed from 1 January 2026.   

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Austrian Supreme Court:  Limited duty of banks to provide pledgor with information on the financial situation of the debtor 

The Austrian Consumer Protection Act provides for certain warning and information obligations of creditors if a consumer joins an obligation of a third party as co-debtor, guarantor or surety (§§ 25c, 25d KschG). In its two decisions 9 Ob 37/24t and 3 Ob 95/24b, the Austrian Supreme Court clarifies that these provisions do not apply to the liability of a third party as pledgor. On the one hand, this is because the liability as pledgor is always limited to the value of the pledged assets and is therefore less risky than the liability as co-debtor, guarantor or surety. On the other hand, the Supreme Court states that the warning and information obligations of lenders / banks should generally not be overstretched. In principle, third parties who secure another party's obligation must inform themselves about the debtor's financial circumstances, which applies all the more if they have a close relationship with the debtor (eg if they are a (minority) shareholder of the debtor as in the case 3 Ob 95/24b).

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Fictional acquisition and remuneration of donations by private foundations

The effect of a contribution by a private foundation

Investment funds, which were acquired before a certain date (before 31  December 2010), are not taxed in case of a disposal. The decision of the Tax Appeals Court concerned the question of whether the contribution by a private foundation to an individual thus characteristic will sustain. The contribution of the funds to an individual might be affected by the acquisition costs fiction, which would turn the contributed funds into “new-stock”. Consequently, the funds disposed by the individual would be taxed. The Tax Appeals Court ruled that the contribution of the funds causes a subsequent for liability on the sale of the funds units by the individual. The question is passed on to Administrative High Court.

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