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Löger: Annual Tax Act 2018 Enacted by Parliament

Vienna (OTS) – In order to reduce the frequency of amendments to tax legislation and thus improve clarity and certainty for all involved persons and institutions, annual tax legislation has been introduced. The Annual Tax Act 2018 passed by the Austrian Parliament on Wednesday includes simplifications of tax laws, the abolishment of various fees and measures in the fight against tax avoidance.

“With the enactment of the Annual Tax Act, we begin the turning of screws on a yearly basis to make tax regulations more comprehensible and thus increase legal certainty. At the same time, we intend to improve the services of the Financial Administration. The key part of this effort will follow in the shape of the Tax Relief Reform, with which we will make fundamental changes to the legal framework besides the actual tax relief,” Minister of Finance Hartwig Löger said after the parliamentary vote on Wednesday.

“With more than 160 amendments, the Austrian tax laws have become exceedingly complex over the past 30 years. Their application is becoming more and more challenging for the Financial Administration and tax consultants, but especially for the tax subjects themselves. We want to change that and have taken first steps in this direction in the Annual Tax Act 2018,” Löger added.

In contrast to previous legislation, start-ups and companies operating apps that users are charged for will now have to pay VAT on revenues up to EUR 10,000 earned in other EU countries only in Austria. This reduces the need for laborious bureaucracy in foreign countries and leaves enterprises more time for important business matters.

The act also brings more clarity for landowners who make their land available for infrastructure projects. A withholding tax of 10 percent will replace the complex existing regulation and avoid intricate calculations and tax consultancy costs for affected persons.

The separate applications for exemption from engine-related insurance tax and free motorway vignettes for persons with disabilities will be consolidated and can be filled out electronically.

A comprehensive overhaul of the system of federal fees (Bundesabgabenordnung BAO) will provide more legal certainty for businesses in particular:

In future, there will be also be a so-called advance ruling, i.e. a binding legal information, in the areas of “international tax law” and “VAT”. Previously, information in these areas could only be requested in a “good faith” format offering less legal certainty.

The Annual Tax Act 2018 also introduces an accompanying control mechanism, the so-called “Horizontal Monitoring”. Under certain circumstances, Horizontal Monitoring will be possible for businesses in future as an alternative to the traditional external audit by the tax authorities. Ongoing dialogue with the Financial Administration leads to improved planning and legal certainty, since real-time monitoring also ensures timely and correct levying of duties and taxes.

Measures against tax avoidance in Austria

As early as 2014, Austria passed legislation prohibiting expenses for interest and licenses taxed at low rates abroad from being claimed as profit-reducing expenses in Austria. “With this so-called prohibition of deduction, Austria was a trailblazer in Europe,” Löger says. “Germany, for example, only introduced this regulation to combat tax avoidance in 2017 following the Austrian example,” he explains. The prohibition of deduction was adapted with the Annual Tax Act 2018 to fully cover all internationally established low-taxation models.

Implementation of the European directive against tax avoidance practices was likewise enacted on Wednesday. This act deals primarily with profits made by subsidiaries in foreign countries and taxed at low rates. Such profits were previously only subjected to Austrian corporate income taxation when they were disbursed to the Austrian parent company. From now on, these profits taxed at low rates abroad will be will be liable for Austrian corporate taxes regardless of disbursal to the Austrian parent company. This will increase Austrian tax revenues.

Abolishment of fees

Following the abolishment of the fee for rent contracts for dwellings, the Annual Tax Act 2018 has now also done away with the fee for certificates of bond in the context of rent contracts. “This measure especially benefits young people who are still in training or education, as they often have to submit certificates of bond signed by their parents to landlords when moving into a flat of their own. We are also abrogating bagatelle taxes whose revenues are disproportionate to the costs of their levy,” Löger announced.

In addition to the modernization of the offsetting of “surrender of land” by landowners for infrastructure projects, the underlying lease and easement contracts have also been exempt from legal transaction fees.

“We are pleased that these measures have been passed by Parliament, since this represents an important joint step towards relief, simplification and reduction of bureaucracy,” Minister of Finance Hartwig Löger emphasized in closing.