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Löger simplifies tax law, redoubles fight against tax avoidance and abolishes stamp duties Löger submits legislative package "Annual Tax Legislation 2018" for 6-week consultation

Austria's Annual Tax Legislation was initiated in order to reduce the number of tax-law amendments and thereby to create greater clarity for all those involved. For 2018, this legislative package comprises simplification of tax law, the abolition of various stamp duties, and measures to combat tax avoidance.

With over 160 amendments over the past 30 years, Austrian tax law has become highly complex. Application of the law is presenting ever greater challenges to the tax administration, tax advisers and taxpayers. The Austrian federal government has always stressed the need for reform; now, step-by-step, Austrian Finance Minister Löger aims to simplify domestic tax law: "Each year, we will make adjustments so as to make tax law easier to understand and thereby enhance legal certainty. At the same time, we wish to improve the services offered by the tax administration. The biggest move will take place in 2020 by way of reform to the tax structure; here, in addition to easing the tax burden, we will make fundamental changes to the legal framework."

In a change from previous practice, start-ups and companies providing chargeable apps will in future only have to pay VAT in Austria for their sales made in other EU countries up to EUR 10,000. This saves costly bureaucracy abroad and frees up more time for essential business.

The package also provides greater clarity for property owners who make their land and property available for infrastructure projects. A withholding tax of 10% will replace the complex previous rule and save those involved costly calculations and tax consultancy costs.

Access to exemption from engine-based insurance tax and free tax discs for the disabled will be greatly simplified. The previously separate applications will in future be combined and, in addition, subject to automated processing.

A comprehensive change to the Austrian Federal Fiscal Code will above all provide businesses with greater legal certainty:
A binding so-called "Advance Ruling" will in future be issued by the tax office also in the areas of "international tax law" and "value-added tax". Previously, it was only possible to request such information in a context of "good faith", which provides lesser legal certainty.
In addition, so-called "Horizontal Monitoring" is to be introduced by way of alternative to the traditional external audit of companies by the tax authorities. Ongoing dialogue with the tax administration leads to increased planning and legal certainty, since timely monitoring also secures the prompt and accurate collection of taxes.

Combating tax avoidance in Austria

Back in 2014, Austria introduced a prohibition in accordance with which costs in relation to interest rates and licences subject to low levels of tax abroad could no longer be claimed in Austria against profits (so-called prohibition on deduction). "This made us trailblazers in Europe," declared Löger; "Germany, for instance, only introduced this ruling, based on the Austrian model, in 2017. Now, we are going one step further and establishing new standards in the fight against tax avoidance. More will follow, for instance appropriate taxation of the digital economy," added Löger.

As part of the Annual Tax Legislation for 2018, the prohibition on deduction will be strengthened so that absolutely all common international low-taxation models are covered. Loopholes which have arisen since introduction of the prohibition in 2014 will be closed through "tightening of the prohibition on deduction for interest and licence fees".

Added to this is implementation of the EU Anti-Tax Avoidance Directive. This concerns in particular profits generated by subsidiaries abroad which are subject to low tax rates. Previously, such profits only became subject to Austrian corporation tax when paid over to the domestic parent company. In future, such profits taxed at low levels abroad will be taken into account in Austria for tax purposes irrespective of whether or not they are paid to the domestic parent company. This will lead to higher tax revenues in Austria.

Abolition of stamp duties

Since the stamp duty charged on residential tenancy agreements has been abolished, in order to entirely ease the burden in this area, the duty payable on guarantee declarations in connection with tenancy agreements is also to be scrapped. "In particular, young people still in education will benefit from this measure since, when moving into a residential apartment, they are often required to provide guarantees from their parents to their landlord. At the same time, we are abolishing minor taxes where the costs of collection by civil servants outweigh the amount of revenue received," explained Hubert Fuchs, Austrian State Secretary of Finance.

In addition to modernising the offsetting of the "provision of land and property" by property owners for infrastructure projects, the underlying leases and easement contracts will be exempt from legal transaction charges.

Adoption of the measures by the Austrian Parliament is scheduled to take place, together with the Family Bonus Plus, in July of this year.

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