Tax & Legal News in English | October 2024

COVID-19 government aid: liquidation of the “COFAG”  

Since the Austrian Constitutional Court (VfGH) ruled in October 2023
that the delegation of granting financial COVID-19 support to a private law
company, the “COFAG” was unconstitutional, it became necessary to dissolve the COFAG and to transfer the tasks of the COFAG to the financial administration. The “COFAG Reorganization and Dissolution Act (COFAG-NoAG)” has now mandated that the tasks previously handled by COFAG be transferred to the financial administration as of 1 August 2024. While the Federal Tax Office for Large Enterprises is now responsible for deciding on the – presumably few – remaining funding applications, it will continue to make decisions under private law. However, claims for the repayment of improperly granted funds will generally be transformed to a public law claim, asserted by the responsible tax authority by formal administrative decision. The financial administration has time until at least 31 July 2034, to assert these claims due to a generous statute of limitations.

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Social security agreement with Québec

To enable social security insured persons to receive the same or similar social security benefits during stays abroad as in their home country, appropriate agreements are made between the states. Regulation 883/2004 applies to activities within the EU, EEA and Switzerland. Bilateral agreements can be concluded by the Republic of Austria with other states to provide social security for people who migrate and work within these countries. The since 1987 existing social security agreement between Austria and Canada was renewed in the mid of year 2023. Due to the renewal of the Austrian-Canadian agreement, a separate social security agreement between Austria and Québec has been concluded as well, which came into force on 1 February 2024. This
agreement covers, among other things, accident insurance (particularly benefits in kind in the event of work-related accidents and occupational diseases) and pension insurance (consideration of insurance periods for both countries).

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Deduction of double household costs

For taxpayers who must maintain two households for professional reasons, the double household costs can be tax-deductible in their personal tax returns. In order to consider these costs as tax-deductible some conditions must be met, inter alia that the distance between the family home and place of work must be over 80 km and the travel time should be more than one hour, so the returning to the family home every day is unreasonable. If certain requirements are met, the costs can be considered as tax deductible over a longer period or even permanently.

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The new refund system in Austria: What's changing?

On 1.1.2025 a generally applicable refund system will be introduced in Austria for single-use drinks packaging (aka plastic bottles, cans and glass bottles) with a filling volume of 0.1 to 3 liters. Buyers of disposable drink containers must pay a deposit of EUR 0.25 per packaging when purchasing. This system is based on the European intention to further advance the circular economy under waste legislation and thereby reduce waste generation.

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Public Country-by-Country-Reporting 

With the implementation of the Public CBC reporting (CBCR-VG) into national Austrian law, in-scope Austrian taxpayers of EU and Non-EU MNEs have to effectively navigate differing implementations of the Public CBC reporting across EU Member States. With this article we take the opportunity to provide you with an overview of the possible reporting obligations and practical challenges that Austrian companies might face. 

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Split Voting in GmbH

The Vienna Court of Appeal has confirmed the possibility of split voting for trust-held shares, a stance that the Austrian SupremeCourt did not challenge. This practice may become more common in the future. Inorder to allow for such a split voting, trustees need to disclose the identityof the trustor and the amount of the trust-held shares. This will in practice likely require disclosure of the trust agreement. This may be advantageous forcomplex resolutions, as it allows for the consideration of diverse opinions. Currently, Austrian GmbH law lacks specific provisions for this practice.

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Tax Appeals Court: Basis for depreciation  for first-time lettings 

In this decision, the Tax Appeals Court concludes, that the recognition of notional acquisition costs is not possible. The rental cannot be regarded as first-time letting  of a building with several apartments if one residential unit in the building has already been used to generate income (building-related approach).

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Pillar-Two: Proof of assignment as a central taxpayer can now be provided via FinanzOnline

According to the Austrian Minimum Taxation Act (“MinBestG”), only a single Austrian constituent entity is assigned to be liable for any top-up-tax under the QDMTT, IIR and UTPR and thus acts as a central taxpayer for the entire group in Austria. The MinBestG allows affected groups the greatest possible flexibility on that matter by giving the (domestic or foreign) ultimate parent entity the right to assign one Austrian constituent entity as a central taxpayer.

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Grid access fees for renewables – the Austrian Supreme Court of Justice has finally issued a landmark

In Austria, some grid operators have adopted the ‘double’ practice of charging grid access fees when renewable generation plants such as photovoltaic systems are additionally installed. A case that became known in the media over the summer (we reported on it in our Tax & Legal Breaking News No. 8/2024, 31 July 2024) has now seriously undermined this practice. The Austrian Supreme Court of Justice (OGH) is now providing clarity.
 

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