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Vienna, 09.05.2019 Löger and Fuchs submit Anti-Fraud Package for legislative evaluation

Just two months after appointing an expert panel, Finance Minister Löger and State Secretary of Finance Fuchs deliver concrete measures

Vienna (OTS) – "Through our budget relief program, we are reducing the tax burden on workers, pensioners and on the country of Austria. As a result, every honest taxpayer will benefit from taking home a greater proportion of their gross income. Nevertheless, we will be engaging in more stringent action against tax offenders who enrich themselves at the cost of the wider community. Complex avoidance structures and tax optimisation models will be curtailed and penalties increased," declared Austrian Finance Minister Hartwig Löger.

"Tax fraud, aggressive tax planning and avoidance structures cause huge damage to Austria as a centre of economic activity and constitute a threat to domestic jobs. If a small number of people commit fraud on a massive scale against the wider community, we cannot therefore sit idly by. Our aim is to ensure that no fraudster can get off scot-free," continued State Secretary of Finance Hubert Fuchs.

Just two months ago, within the framework of introducing the Anti-Fraud Division, the Austrian Federal Ministry of Finance therefore announced appointment of a panel of experts in order to identify loopholes in the law exploited by fraudsters and to take legislative action to close them. Extensive research has been undertaken in the realm of tax investigation, international tax law, VAT law, penal tax law, customs and also anti-fraud measures in general. There has also been an intensive exchange of ideas with the Ministry of Justice and the Financial Procurator's Office in order, based on a prudent approach, to incorporate their expertise too. The finished package has now been presented and is today being submitted for legislative evaluation.

According to Finance Minister Löger, "Through the Anti-Fraud Package, we are implementing concrete measures in order to close loopholes in the fight against tax fraud and to eliminate organised international tax fraud from Austria. Through this, the Austrian Federal Government is achieving greater justice and equality of opportunity for the vast majority of honest taxpayers."

The measures include the following:

Increasing penalties for tax and customs offences

In order in future to be able to combat serious tax and customs offences in a more effective manner, in the case of tax evasion, smuggling or the handling of goods on which tax or duty has been evaded, where the amount involved totals over EUR 100,000, in addition to a monetary fine, the maximum possible custodial sentence is being increased from two to four years.

Sanctions for cross-border VAT carousel fraud

Within the framework of so-called "carousel dealing", in association with VAT systems within the Member States repeated abuses occur of intra-community VAT exemption. In future, therefore, failure to apply VAT will in any event become subject to criminal sanction if, from the outset, the intention exists not to pay VAT. In addition, cross-border VAT fraud may now be legitimately penalised in Austria if it has a domestic connection, even if the loss of VAT arose in another EU Member State.

Cum-ex fraud: Further measures already being taken

At present, the fiscal offence authorities are not able to investigate in fraud cases where, although the federal tax authorities have been deceived, a minor offence, but not a serious fiscal offence, has been committed under the Austrian Criminal Code. This has meant that, for instance in the case of cum-ex fraud, the fiscal offence authorities have often been prevented from being involved in any investigations. In future, therefore, the Public Prosecutor's Office will be able to instruct the fiscal offence authorities to undertake investigations in the event of merely suspected fraud against the tax authorities.

Similarly, a basis is now being created for issuing recovery notices, since, at present, the Austrian Federal Fiscal Code does not provide for the possibility of clawing back amounts which have been paid out in the absence of a due legal basis. Fraud models such as those related to cum-ex fraud should therefore be consigned to the past.

Increase in transparency in relation to direct taxes

Transparency will also be increased in relation to direct taxes in order to be able to combat tax avoidance and tax evasion more effectively. In particular, the duty will be established to report certain cross-border structures, particularly on the part of tax advisers and lawyers. In future, all such structures will be subject to compulsory reporting to the Austrian tax authorities where they involve at least two EU Member States or an EU Member State and a third country, and comprise a risk of tax avoidance, circumvention of the Common Reporting Standard Act or prevent identification of the beneficial owner.

Prosecution of breaches of duty by digital agency platforms

In the context of the Digital Tax Package, introduction of a disclosure obligation in the area of the "sharing economy" has been introduced in order to establish greater fairness in relation to domestic companies. Measures in the Anti-Fraud Package will now ensure that a breach of these obligations is also subject to criminal sanction and may incur a penalty of up to EUR 50,000.