Austrian Tax News - Issue 44 - March 2014

Transcription

www.pwc.com/at/taxnews
Austrian Tax News
In this issue
Direct Taxes
1 Tax changes in Austria
by Lukas Bernwieser
3 Amendments to Austrian Tax Amendment Act 2014 –
Other changes
by Cornelia Kalina and Alexander Wagner
4
Decision of the Independent Tax Tribunal (ITT) on the
qualification of foreign vehicles as investment funds
for tax purposes
by Johannes Edlbacher and Benjamin Fassl
5 Highlights of the updated guidelines to the Austrian
Reorganisation Tax Act issued by the Austrian Ministry
of Finance
by Martin Jann and Martina Gruber
Legal
6 GmbH “not so light”
by Alexander Wagner and Phillip Andert
Expats
7 News regarding the taxation of employees
by Guelay Karatas and Laura Herold
8 Austrian Tax Facts and Figures
Issue 44, March 2014
Tax changes in Austria
The new Abgabenänderungsgesetz 2014
(“AbgÄG 2014”) has been passed by parliament
and came into force on 1 March 2014.
The new AbgÄG 2014 includes numerous amendments, thus
having a significant impact on Austrian tax law.
Income tax
Tax loss carry-forwards
Previously, tax loss carry-forwards could only be offset against
75% of the taxable profits of the current year. This limitation
has since been abolished for individuals having a business. Tax
loss carry-forwards can then be utilised without such limitation. However, in terms of corporations, this general 75% cap is
to remain in force.
Branch losses
Under current tax law, Austrian companies have to recognise
foreign branch losses and offset them against domestic positive
income within the same financial year. Such branch losses are
subject to recapture taxation once they can be utilised in the
country of the branch.
From 2015 onwards, branch losses from countries without
comprehensive administrative assistance are automatically
subject to recapture taxation in the 3rd year after recognition
of the losses. This is under the condition that the losses were
not recaptured earlier. The automatic recapture taxation will
apply for all losses from 2015 onwards (i.e. losses incurred in
2015 will have to be recaptured in 2018, while 2016 losses will
have to be recaptured in 2019 at the latest).
Direct Taxes
The new rules also affect “old” branch
losses. Branch losses incurred until
2014 should be subject to recapture
taxation in 2016. According to the
transitory provisions, the loss amount
to be recaptured has to be spread
over three years, i.e. from 2016 to
2018. “Old” branch losses upon the
closing or sale of such foreign branch
are exempt from recapture taxation,
provided the losses were incurred (i)
in fiscal years ending before 1 March
2014, (ii) the losses cannot be used
abroad and (iii) the closing/sale of
the branch was effected before 1
January 2017.
Deductibility of long-term accruals
Under current tax law, long-term
accruals for uncertain debts and contingent losses (more than 12 months)
have to be discounted with a flat rate
of 20%, so that only 80% of the accruals are tax deductible. The proposed
AbgÄG 2014 states that long-term
accruals made from 30 June 2014 onwards are to be discounted depending
on their actual duration. The discount
rate to be used is 3.5%. Valuation differences resulting for already existing
long-term accruals have to be spread
over three years.
Limited tax liability on interest
income
Under previous tax law, interest
received by foreign resident individuals and corporations from Austrian
borrowers is in general not subject to
tax (except in the case of some specific collaterals). Irrespective of this,
interest on Austrian bank deposits
received by individuals resident in the
EU is subject to 35% EU withholding
tax on the basis of the Austrian EU
Withholding Tax Act.
Starting in 2015, 25% withholding tax
will be imposed on interest if such interest is subject to withholding tax under domestic law. This is e.g. the case
in terms of interest on bank deposits or
Austrian bonds, where the paying/depositary agent is located in Austria.
2
Unless eliminated by an applicable
tax treaty, the withholding tax to be
withheld will create an additional tax
burden for non-EU individuals and
non-Austrian corporate lenders who
own such instruments.
Interest incurred on intercompany
loans as well as non Austrian interest
bearing securities (e.g. bonds) of
foreign issues held at an Austrian
depository account are not affected
by the new rules.
Group taxation
Goodwill amortisation
Under the previous tax group regime
upon a share deal in an operating
domestic company, tax deductible
goodwill can be amortised over a
period of 15 years. Goodwill amortisations have now been abolished,
and are to be applicable only for share
deals effected after 28 February 2014.
Existing goodwill amortisations are
grandfathered, provided the goodwill
amortisation potentially impacted the
share purchase price.
Foreign group members
Under the previous tax group regime,
an Austrian tax group could also
include foreign subsidiaries. Losses
of such foreign group members had
to be recognised and offset against
Austrian profits. However, losses of
foreign group members are subject to
recapture taxation once they can be
utilised in the country of the group
member or upon exit of the foreign
group member from the tax group.
Since 1 March 2014, however, the
scope of foreign tax group members
has been limited to corporations
being resident in EU Member States
and in states that have entered into
a comprehensive administrative
assistance arrangement with Austria.
Companies being resident in other
states shall automatically be excluded from the tax group as from
1 January 2015. Foreign losses
already deducted in the past will be
recaptured over a period of three
years (2015-2017).
Starting in 2015, ongoing tax losses
from foreign group members can only
be recognised to the extent of 75% of
the profit of all domestic group members (including the group leader).
The remaining loss surplus may be
carried forward by the group parent.
Utilisation of tax loss carry-forwards
Starting in 2015 the general 75% cap
applying to the utilisation of tax loss
carry-forwards (calculated on the
basis of the overall positive income) is
not to be applicable to profits resulting from the recapture of foreign
losses (i.e. losses of foreign group
members and foreign branch losses).
Therefore, available tax loss carryforwards on group parent level can
be 100% offset against such recapture
profits.
Deductibility of interest and royalty
payments
Restriction on the deductibility of
interest
Under Austrian tax law, interest is generally deductible (i.e. no thin capitalisation rules). However, interest expenses
relating to the acquisition of (foreign)
shareholdings from related parties are
not tax deductible. Under the previous
tax law it was possible to achieve deductibility of such interest by cancelling
the linkage between the debt financing
and the acquired shareholding (e.g.
by way of a qualifying reorganisation).
The new law, however, calls for the
restriction of the interest deduction
to apply irrespective of whether the
underlying acquired shareholding still
exists or the related debt-financing is
separated from the shareholding. The
restriction is to apply for interest incurred from 1 March 2014 onwards.
Anti-hybrid rules
Deductibility of interest and royalty
expenses paid by Austrian corporaAustrian Tax News, PwC
Direct Taxes
tions will from now on be denied if
the payments are made to related
parties located in low-tax and offshore jurisdictions. The restriction
applies if the income derived from the
interest and royalty payments
• i s not taxed in the recipient’s state
due to a general or individual tax
exemption, or
• i s subject to a nominal tax rate of
less than 10%, or
• is subject to an effective tax rate of
less than 10% due to specific tax
incentives granted for such type of
income.
If the recipient of the interest or royalty paid is not the beneficial owner,
the above mentioned criteria are to be
applied at the level of the beneficial
owner. Accordingly, “back-to-back”
financing structures are also covered
by the new provision.
Author:
[email protected]
+43 1 501 88-3330
Amendments to Austrian Tax Amendment Act 2014 –
Other changes
Outlined below are further amendments with reference to the “Abgabenänderungsgesetz
2014”.
Value added tax
The threshold in connection with the
simplified invoice elements (§ 11(6)
Value Added Tax Act) will be increased from EUR 150 to EUR 400. This
amendment came into effect on 1
March 2014.
Capital duty
Capital duty is currently imposed at a
rate of 1% on the initial contribution
of capital, on other contractual or
voluntary contributions in cash or in
kind or on certain hybrid financing
instruments to Austrian corporations.
Capital duty will be entirely abolished
as from 1 January 2016.
Stability fee for banks
The taxable base for the stability fee
will change from a combination of the
balance sheet total and the transaction volume of derivatives to the balance sheet total only. In addition, the
stability fee itself will be increased
from 0.055% to 0.09% (EUR 1 billion
to EUR 20 billion balance sheet total)
or from 0.085% to 0.11% (balance
sheet total over EUR 20 billion),
respectively. Furthermore, the special
Austrian Tax News, PwC
contribution in connection with the
stability fee will be increased from
25% to 45%.
These amendments became effective as from the second quarter of
2014. As a consequence, the previous
legislation will still apply for the first
quarter of 2014.
Single premium insurance
Endowment and death insurance
policies with a contract period of at
least 15 years are exempt from withholding tax and subject to a reduced
insurance tax rate. Under the new
law, the minimum contractual period
for insured persons older than 50 years of age will be reduced to 10 years
with regard to contracts concluded
from 1 March 2014 onwards.
Tax on sparkling wine
The beginning of March this year saw
the reintroduction of tax on sparkling
wine. The tax will amount to EUR 100
per hectolitre and is to be applied to
particular intermediate products as
well. All other intermediate goods are
to be taxed at EUR 80 per hectolitre.
Alcohol tax
The standard tax rate for alcohol has
been increased from EUR 1,000 to
EUR 1,200 per hectolitre of alcohol.
Tobacco tax
The quantity-related tax rate for cigarettes and fine-cut tobacco will be increased in four stages (as of 1 March
2014, 1 April 2015, 1 April 2016 and
1 April 2017) from 42% of the retail
selling price and EUR 35 per 1,000 pieces to 39% of the retail selling price
and EUR 53 per 1,000 pieces.
Authors:
[email protected]
+43 1 501 88-3093
[email protected]
+43 1 501 88-3678
3
Direct Taxes
Decision of the Independent Tax Tribunal (ITT) on the qualification of foreign vehicles as investment funds for tax purposes
According to § 42(1) Austrian Investment Fund Act 1993 (“IFA 1993”),
each foreign vehicle regardless of
its legal form investing directly or
indirectly based on risk spreading
(six or more investments) is generally qualified as a foreign investment
fund for Austrian tax purposes. In its
decision of 21 October 2013, the ITT
concluded that this provision is not
consistent with the principle of the
free movement of capital and therefore contravenes Article 40 of the EEA
Agreement.
Background
In the present case an Austrian
private foundation held 100% of the
shares in two Liechtenstein corporations. Both corporations invested
their whole capital in obligations,
shares and precious metals.
The Austrian tax authority was of
the opinion that the Liechtenstein
corporations were to be treated as
investment funds for Austrian tax
purposes, as this form of investment
corresponds to the principles of risk
spreading according to § 42(1) IFA
1993. The qualification of a foreign
corporation as an investment fund for
Austrian tax purposes means that the
corporation is treated in a tax transparent manner. Consequently the
corporation’s income, irrespective of
whether it is distributed or accumulated, is taxable directly at the level of
the Austrian investor.
4
As § 42(1) IFA 1993 was applicable
to foreign vehicles only, an Austrian
corporation investing according to
the principles of risk spreading could
not be qualified as an investment
fund for tax purposes. Therefore,
if the two corporations had been
resident in Austria, distributions only
would have been taxable, whereas at
the level of private foundations these
distributions would have been tax exempt according to § 10 of the Austrian
Corporate Income Tax Act (“CITA”).
The Austrian private foundation as
appellant considered this as a discrimination of foreign corporations, as
the exemption under § 10 CITA does
not apply to investment funds.
The ITT’s decision
The ITT concluded that § 42(1) IFA
1993 provides for an unequal treatment of Austrian and foreign corporations investing directly or indirectly
based on risk spreading and allowed
the applicant’s appeal. The relevant
tax authority filed a complaint against
this ITT’s decision with the Administrative Court.
Reaction of the Austrian Ministry of
Finance
The Austrian Ministry of Finance
was already aware of the unequal
treatment of foreign and Austrian
corporations investing based on risk
spreading before the ITT’s decision.
Therefore, in the course of the trans-
position of the Alternative Investment
Fund Manager Directive (“AIFMD”)
into national law in August 2013, the
legal definition of Austrian and foreign investment funds was amended
in order to comply with the principle
of the free movement of capital.
According to the new provisions,
which are now to be found in §§ 186
and 188 IFA 2011, each Austrian and
foreign Alternative Investment Fund
within the meaning of the AIFMD
(exemptions apply to AIFs in real
estate) as well as each Austrian and
foreign UCITS (Undertakings for
Collective Investment in Transferable
Securities) fund are to be qualified as
an investment fund for tax purposes
irrespective of the legal form. Further,
other foreign vehicles investing based
on risk spreading and not subject to a
tax comparable to Austrian corporate
income tax are deemed to be investment funds.
Authors:
[email protected]
+43 1 501 88-3627
[email protected]
+43 1 501 88-3436
Direct Taxes
Highlights of the updated guidelines to the Austrian Reorganisation Tax Act issued by the Austrian Ministry of Finance
On 14 October 2013 the Austrian Ministry of Finance finalised the update
on the guidelines for the Reorganisation Tax Act. This update focused
on art contributions, mergers and
conversions. Other forms of reorganisations were not changed within the
guidelines of the Austrian Ministry of
Finance at this stage. The highlights
of the update are as follows:
Cross-border contribution
completely revised its view on the
system of cross-border contributions
in which the Austrian taxing right is
limited or completely lost. The tax
treatment of cross-border contributions depends on various factors (i.e.
the tax liability of the underlying
assets, the tax liability of the new
shares issued by the receiving company, the residence of the receiving
company and the residence of the
contributor). The Austrian taxing
right is not limited in cases where an
Austrian contributor contributes its
permanent establishment to a company independent of its residence. In
cases of contributions into a company that is resident within the EU in
which the Austrian taxing rights are
limited, the taxable event may be
delayed until the disposal of the new
shares in the company or the disposal
of the assets contributed (permanent
establishment, separable part of a
business operations, participation in
a partnership, a qualified participation in a company). The absorbing EU
company continues to carry the book
values of the transferred assets. Thus,
a step up of the underlying assets to
the current market value at the time
of the contribution is not necessary.
If, however, the Austrian taxing right
is limited vis-à-vis a non-EU Member
State, a step up must be made.
Contribution of debt financed
shares
If there is a direct link between the
liability and the equity contribution
given to the subsidiary, the contribution of a qualified participation
mandatorily contains the liability
as well. A direct link is deemed to
exist if the time gap between equity
contribution to the subsidiary and the
effective date of contribution of the
participation is less than two years.
If the minimum two year period is
exceeded, the contributor can decide
whether or not the contribution comprises the liability.
Reorganisations within tax groups
In general, losses of the transferring
company are attributed to the absorbing company when the contributed
assets (permanent establishment, separable part of business operations,
participation in a partnership and a
qualified participation in a company)
are comparable to the scope of the
assets at the time when the loss was
incurred. With mergers and contributions in kind within a tax group,
there is often the concern that losses
might be at risk even though such
losses were attributed to the group
parent. This is especially true for
mergers or contributions in kind
with the group parent. Whilst in
merger situations the losses of both
merging group members are at risk
if the underlying assets are no longer
comparable in size, in situations of
a contribution the transferred loss is
not at risk.
Merger of cash-box companies
Profit distributions as well as capital
gains from foreign companies do not
fall under the participation exemption if their core business is passive
and the foreign profit is effectively
taxed at less than 15% (“cash-box”).
In this case, the profit distribution or
the capital gains are not exempted
from Austrian tax, but the foreign tax
is credited upon the Austrian tax. For
an equal treatment of profit distributions/capital gains and mergers
of such companies, the Austrian
Reorganization Tax Act provides for
a notional dividend distribution. This
notional dividend distribution first covered only mergers onto the Austrian
parent company (upstream merger).
Now the guidelines also implemented
the changes in law and extended the
notional profit distribution to mergers
with other subsidiaries resident in
Austria or in other states. But the notional dividend distribution is not effective if two cash-boxes are merged,
because the taxable amount remains
recoverable in future. However, this
exception from the notional dividend
distribution is viewed to be narrow.
According to the Austrian Tax Authorities the absorbing company must
fulfil the cash-box criteria for every
single year.
Authors:
[email protected]
+43 1 501 88-3206
[email protected]
+43 1 501 88-3219
5
Legal
GmbH “not so light”
The much heralded “Gesellschaftsrechts-Änderungsgesetz 2013” was meant to reduce the minimum share capital for establishing a GmbH from EUR 35,000 to EUR 10,000. These changes
have now been retracted due to the “Abgabenänderungsgesetz 2014” and created a different
outcome.
Amendment to Austrian Limited
Liability Company Act
The minimum share capital for a
limited liability company (GmbH) is
again back to EUR 35,000. Generally,
one half of the registered capital must
be raised in cash while the remainder may be contributed in the form
of assets (contributions in kind). Of
the original capital contribution at
least EUR 17,500 must actually be
paid in upon incorporation. “Abgabenänderungsgesetz 2014” provides
for favourable treatment for start-up
companies for a period of ten years
after incorporation. The minimum
share capital of those companies is
EUR 10,000, with at least EUR 5,000
having to be paid in cash upon incorporation.
The fact that these companies take
advantage of the favoured treatment
and thus have less share capital is
shown in the companies register.
6
Taxation changes
Since the minimum corporate income
tax (CIT) is linked to the minimum
share capital, the minimum CIT
amounts again to EUR 1,750 for each
full year. The outcome of parliamentary discussions was a reduction to
EUR 500 p.a. for the first five years
and EUR 1,000p.a. for the next five
years.
Authors:
[email protected]
+43 1 501 88-3678
[email protected]
+43 1 501 88-1438
Expats
News regarding the taxation of employees
The AbgÄG 2014 brings with it several amendments regarding the taxation of employees as
well as tax deductibility of labour costs.
Limitation of deductibility of
personnel expenses
Salaries (including all payments in
cash and in kind) exceeding EUR
500,000 per person per year will no
longer be deductible as from 1 March
2014. This limitation will apply for
payments made to employees as well
as for other similar contractors who
are fully integrated organisationally
in the company such as members of
the management board acting on
the basis of a service contract. The
threshold of EUR 500,000 shall also
apply to the lessee in the case of staff
secondments.
times the social security contribution maximum contribution basis per
month, i.e. currently EUR 40,770.
The new limitation shall apply for
voluntary severance payments, indemnity payments for termination of
employments and settlement payments. Statutory severance payments
and social plans will remain exempt
from this limitation.
Statutory severance payments, voluntary severance payments and remunerations which are subject to the
privileged income tax rate of 6% shall
be exempt from the new rule. Other
severance end termination payments
as well as related provisions are covered by this limitation.
Solidarity tax
Generally, the 13th and 14th salaries
and certain other payments in Austria are subject to an income tax rate
of 6%. Under the Stability Act 2012,
such payments had to be taxed at
a higher tax rate depending on the
height of the annual income for a period of four years up to 31 December
2016 (temporary solidarity tax). Now
however, the AbgÄG 2014 stipulates
that the solidarity tax is to apply for
an undefined period of time.
Golden handshakes
The currently favourable taxation of
golden handshakes at 6% will be limited for payments after 28 February
2014. The 6% privileged rate will only
apply for a maximum amount of nine
Use of company cars by employees
Where a company car is provided to
an employee intending to use it for
private purposes, this will be deemed
compensation for income tax purposes. Such benefit-in-kind forms part
of the taxable income of the employee. The deemed income is currently
based on 1.5% of the acquisition cost
(up to a cap of EUR 600) of the car if
the private use of the car exceeds 500
km per month, otherwise 0.75% (up
to cap of EUR 300).
increased the threshold for periods
starting 1 March 2014 to EUR 720 for
private use of more than 500km per
month and to EUR 360 for use of less
than 500 km per month.
Authors:
[email protected]
+43 1 501 88-3336
[email protected]
+43 1 501 88-3329
7
Austrian Tax Facts and Figures
Contacts
Taxation of corporations
Corporate income tax rate
(Basis – adjusted statutory accounts)
25%
Dividend withholding tax
25%
Non-deductible expenses (examples)
Long-term accruals
3.5% per year
Interest and royalties paid to lowtaxed group
20% companies
Witholding tax on licences/royalties
Interest witholding tax
0% Interest of dept-push down
Significant allowances
Tax loss carry forwards
Research & Development (R&D)
(premium in cash)
Losses may be carried forward for an
10% indefinite period of time
Learning & Education (L&E)
(Alternatively premiums in cash: 6%)
up to Usage of tax losses:
20% 75% of taxable income
Double taxation agreements
Group taxation
International participation exemption for
holding companies
Consolidation of tax losses with
taxable profits
Conditions: Investments >10%, 1 year holding
Conditions: Qualifying participations > 50%
Dividends and Capital gains
0%
Group agreement and agreement on
allocation of tax cost
Dividend EC portfolio (shares) < 10%
0%
with 86 countries – mainly exemption method
Thin capitalization rules
None
CFC rules
None
Annual taxable
valid from January 2005
Foreign participations if EU-resident or third countries with comprehensive assistance agreement
Losses of foreign participations may be offset
against profits of group leader up to 75%
Income Tax
Effective Tax Rate
Marginal Tax Rate
0%
0%
0 - 20.44%
36.50%
+ 5,110
20.44 - 33.73%
43.21%
+ 20,235
> 33.73%
50%
to
€ 11,000
€0
over
to
€ 11,000
€ 25,000
(EK - 11,000) x 5,110
14,000
over
to
€ 25,000
€ 60,000
(EK - 25,000) x 15,125
35,000
over
€ 60,000
(EK - 60,000) x 50%
PwC Österreich GmbH
Wirtschaftsprüfungsgesellschaft
Erdbergstraße 200, 1030 Vienna
Austria
Tel. +43 1 501 88-0
www.pwc.at
Tax Partners:
Monika Berndl
Herbert Greinecker
Peter Hadl
Bernd Hofmann
Aline Kapp
Kurt Lassacher
Peter Perktold Thomas Steinbauer
Thomas Strobach
Christine Weinzierl
Christof Wörndl 1)
2)
ext. 3064
ext. 3300
ext. 80031
ext. 3332
ext. 3044
ext. 2002
ext. 3345
ext. 3639
ext. 3640
ext. 3630
ext. 3335
+43 316 825 30-ext.
+43 662 2195-ext.
We encourage feedback on the newsletter and the content. Equally, we
welcome any of your thoughts on topics
that you would like to see addressed in
future issues.
Visit our website for archived
Austrian Tax News:
www.pwc.com/at/taxnews
Social security on monthly earnings up to € 4,530
Employer’s share
up to 21.83%
Employee’s share
up to 18.07%
Payroll related taxes
approx. 8.0%
Income cap for social security contributions, social security totalisation agreements with various states
Value added tax
Other taxes
in line with the 6th EU directive
Standard rate
20% Real estate transfer tax
Reduced rate
(Food, rent, public transportation etc.)
10%
VAT refund for foreign enterprises – available
up to June 30 of the following year and for
EU enterprises up to September 30 of the
following year.
3.5%
Capital tax
1.0%
Stamp duties –
- Assignment agreements
- Rent agreements
- Suretyship agreements
0.8%
1.0%
1.0%
Copyright and Publisher: PwC Österreich GmbH Wirtschaftsprüfungsgesellschaft, Erdbergstraße 200, 1030 Vienna, Austria
Editor: Christof Wörndl, [email protected]
The above information is intended to provide general guidance only. It should not be used as a substitute for professional advice or as the basis for decisions or actions without prior consultation with your
advisors. While every care has been taken in the preparation of the publication, no liability is accepted for any statement, option, error or omission.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

Austrian Tax News - Issue 44 - March 2014

Transcription

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