Schelling plan: eliminate opportunities for international tax flight

The battle against tax fraud and tax avoidance practices has top priority for Austrian Minister of Finance Hans Jörg Schelling. Austria is providing a model at the national level and has already taken a number of steps to prevent tax fraud in previous years. 

These are aimed at both minimising corporate profit shifting to foreign countries and providing better information to tax offices for targeted audit measures. This is ensured by requiring companies to provide information. 

In addition to licence fees and the account register, a number of other measures have already been implemented to protect honest taxpayers: 

  • Companies are, for example, audited based on risk-oriented criteria. 
  • Companies, in particular international corporations, are periodically audited by the Large Company Audit unit. The staff of the Large Company Audit unit will be increased around 8 percent by 2018. 
  • In addition, a separate audit team of experts specialising in international matters was formed (Task Force Offshore). 
  • On 1 June 2016, a special unit was established for transfer pricing. It is aimed at preventing profit shifting to low-tax countries by means of value chain shifting, economic goods shifting, intercompany credits, service shifting, loans, research transfer pricing, etc. and implementing uniform standards for intercompany settlement in Austria. It is clear that taxation has to take place where value creation occurs. 
  • The register of economic beneficiaries has been approved.

However, European and international responses are needed to combat tax flight more effectively. Hans Jörg Schelling has therefore requested that the EU Commission increase the pace of development on a common European strategy. In preparation for the Eurogroup meeting in Brussels, the Austrian Minister of Finance met with Pierre Moscovici, the EU Commissioner for Economic and Financial Affairs, Taxation and Customs, and provided him a list of measures. These include, for example, plans for a common corporate tax base, virtual permanent establishments and VAT on all mail-order sales.

With respect to virtual permanent establishments, the aim is to record the profits and sales of Internet companies, including those with an online presence but no physical permanent establishments in Austria. The sales generated in our country would be a possible point of reference in this case.  Austria will develop detailed recommendations for such a virtual permanent establishment and present them at the EU level and at the OECD. Austria has firmly decided it wants to be an international pioneer in this area and will therefore continue to promote these plans during its EU presidency.

Schelling’s plan to eliminate opportunities for tax avoidance and evasion

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