Repayment of tax credits despite deferred arrears

In accordance with the 18th COVID-19 Act, to improve the liquidity situation of companies, it should temporarily be possible for tax credits to be repaid to the taxable person despite of due arrears on their tax account. This is especcialy relevant for tax credits resulting from monthly VAT returns (input VAT surplus) for March or Q1 2020, which are due on 15 May.

In general, tax credits can only be repaid if they lead to credit balance on the tax account. Due arrears normally prevent a repayment of credits. This is also true if tax arrears have been deferred or a payment plan has been agreed.

Under the 18th COVID-19 Act, repayments of tax credits should be possible subject to the following preconditions:

• For existing arrears on the tax account, an application for facilitation of payments (deferral or payment plan) must either have already been granted, or a corresponding request already have been submitted via FinanzOnline. No repayment of tax credits is possible in cases in which no application for facilitation of payments has been made or approved.
• Applications for repayment via FinanzOnline must be submitted as follows:
  • For assessed taxes (e.g. income tax, corporate income tax, annual VAT), within one month of issue (delivery) of the assessment notice
  • For self-assessed taxes, at the time of submission (the same day) of the self-assessment (e.g. submission of monthly VAT return)
  • For premiums (e.g. research premium) and rebates (e.g. ENAV/energy tax rebate), at the time of application.

In this context, the phrase “at the time of” means that the refund application for overpayments must be submitted via FinanzOnline on the same day as e.g. the monthly VAT return is filed.

• There are limitations on refunds of import VAT, as well as in connection with reduction/remission of taxes.

In accordance with the legislation passed by the National Council, the rule was intended to apply between 11 May and 30 September 2020, so that it could be applied for monthly VAT returns beginning from March on. However, the Federal Council has raised an objection to the legislation, meaning that the National Council must pass an additional resolution to see it through. It is currently unclear whether the legislation will enter into force in time before 11 May 2020. Our current assumption is that the legislation will enter into force in the form described, even if subject to a delay.

Practical tip

If you anticipate an input VAT surplus for the period March or Q1 2020, for which you would like a repayment, we recommend not submitting the monthly VAT return until 11 May 2020, as otherwise any existing arrears on the tax account will prevent from a repayment of the tax credit.

PwC Austria is available to provide individual support and clarification on specific issues at any time.