Austrian Tax Amendment Act 2023 passed

On 6 July 2023, The Austrian National Council passed the Austrian Tax Amendment Act 2023 (AbgÄG 2023), including multiple reforms, some of which will be presented in more detail.

New rules included in the Austrian Reorganisation Tax Act

The Austrian Company Law Mobility Act will implement the EU Mobility Directive, providing for more flexibility on a corporate level within the EU, e.g., allowing for a cross-border legal demerger. The AbgÄG 2023 includes the accompanying tax measures in this regard but also further changes to the Austrian Reorganisation Tax Act (RTA):

Mergers and conversions/transfer of the legal seat for tax purposes

The new EU corporate mobility does not require any changes for the cross-border merger.

However, there is a new rule regarding side-stream mergers, stipulating for a de-facto tax deferral: If the merger results in a limitation of the Austrian taxation right at the level of the shares in the merging company, any built-in gains in these shares need to be recorded. Such recorded gains become taxable once the shares in the absorbing company are subsequently sold by the shareholder or otherwise excluded from its business assets.

Down-stream legal demerger as qualifying contribution for tax purposes

A down-stream legal demerger under the new corporate mobility act is recognized as a tax neutral qualifying contribution for tax purposes. The provisions for the qualifying contribution apply mutatis mutandis.

Further, the retroactive effect for CIT purposes was specified and a new facilitation for the contribution of shares or partnership interest was introduced, provided the shareholders have pro rata the same shares in the contributed and absorbing entity. 

Combination of partnerships

A failed business combination of partnerships is subject to tax in the amount of the other partners quota, in the amount of own partnership interest tax book values are carried forward, provided built-in gains are properly documented.

Legal demerger

Based on the new possibility of the corporate mobility act of a cross-border legal demerger, a limitation of Austrian taxation right would give rise to a tax liability in Austria which may be settled in instalments upon request.

Electronic notifications to report reorganisations

The competent tax offices need to be notified of any reorganisations. For reorganisations occurring at a date after 31 December 2023, a data sheet on FinanzOnline is to be used for such notifications (instead of a formal letter).

Investments in partnerships

A rule for contributions of partners into the partnership has been introduced. Such contributions require a proper documentation of the built-in gains and are subject to tax in the amount of the ratio contributed by other business partners but typically tax neutral in the amount of the ratio of the contributing partner.

Attribution of dividends from quoted shares

In a ruling dated 28 June 2022, the Austrian Supreme Administrative Court (VwGH) decided that, for tax purposes, dividends are to be attributed to the person who was the owner of the shares at the time of the resolution on the distribution of dividends (day of the general meeting) (VwGH 28.06.2022, Ro 2022/13/0002). As a consequence of this decision, Austrian withholding tax (KESt) on dividends is only refunded to the person who owned the shares on the day of the general meeting. Based on the VwGH ruling, this also applies if the person has not received the dividends at all due to a sale of the shares between the general meeting and the ex-dividend date (i.e., the day from which a share is traded without the dividend).

As this attribution rule for dividends is not in line with international stock exchange practices, the AbgÄG 2023 added a paragraph 4 to section 32 EStG, providing as follows for quoted shares:

• A dividend is only to be attributed to the person who is the beneficial owner of the shares at the end of the record date. The record date is the day on which the central securities depositary of the shares determines the eligibility of dividends. Accordingly, the person that has accounted for the shares in its securities account at the end of the record date may have the Austrian KESt on the dividends credited against corporate income tax, or request a refund based on a double taxation agreement (DTA), the EU Parent-Subsidiary Directive or other provisions.
• To prevent misuse (i.e., arrangements designed to avoid KESt), crediting or refunding KESt on dividends is not possible if the beneficial owner of the shares does not bear an appropriate level of economic risk, a minimum retention period of 45 days has not been fulfilled around the record date, the transfer would result in a tax benefit and the dividends would amount to more than EUR 20,000 in one calendar year. In particular, a KESt refund will not be possible for short-term securities lending if the borrower – unlike the lender – is not subject to KESt.

The new section 32 para. 4 EStG applies to dividends with a record date after 30 June 2023. According to the VwGH ruling, if the record date is before 1 July 2023, attribution of dividends is determined based on beneficial ownership on the day of the general meeting (i.e., the shares have been accounted for in the securities account at the end of the day before the general meeting).

Digital KESt exemption declaration

For securities accounts attributable to the operations of a domestic entity, the Austrian depository is not to deduct any KESt if a KESt exemption declaration has been submitted and forwarded to the Austrian tax office by the depository (section 94 no. 5 EStG). As of 2025, the KESt exemption declaration must be submitted to the tax office in digital form. As of 2025, even for securities accounts of a private foundation, the depository may only refrain from deducting KESt if a digital KESt exemption declaration has been submitted to the tax office (currently, a submission to the tax office is not required).

Clarifications on the taxation of cryptocurrencies

Since 1 March 2022, income from cryptocurrencies has qualified as income from capital, thus generally being subject to a special tax rate of 27.5%. Based on the AbgÄG 2023, the following clarifications were added to the EStG:

• Pursuant to section 27b para. 2 EStG, income from staking, airdrops, bounties and hard forks is no longer to be recognised for tax purposes at the time of receipt but only in the course of subsequent sale. The AbgÄG 2023 clarifies that this also applies in an operational context. Exchanging a cryptocurrency against another cryptocurrency is not to result in a recognition in an operational context (section 4 para. 3b EStG).
• For all units of the same cryptocurrency held on a cryptocurrency address or cryptocurrency wallet, the weighted average price in euros is to be recorded when units are acquired one after the other as acquisition costs (section 27a para. 4 no. 3a EStG).
• A cryptocurrency and the claim to repayment of a cryptocurrency arising in the course of lending constitute a homogenous asset (also refer to Austrian Income Tax Guidelines (EStR), margin note 6178k). Lending a cryptocurrency thus does not constitute an exchange and therefore also does not trigger taxation (section 27b para. 4 EStG).

New general standard for applying for and exercising optional rights in tax returns

To provide legal certainty, a general standard was newly defined under which applying for and exercising optional rights must, in principle, occur within the respective tax return. Accordingly, tax returns as of 2023 should be prepared with due care.

Transitional provision for transferring hidden reserves of private foundations

Built-in gains arising from the sale of shares by a foundation (Privatstiftung) may be transferred to newly acquired shares reducing its acquisitions costs. Up until a recent Supreme Court’s decision it was common practice that a transfer was also possible with regard to capital increases into existing 100% subsidiaries. The Supreme Court rejected a transfer to already existing, increased shares. The transitional provision provides that reduced acquisitions costs of existing capital increased shares remain reduced (as if a transfer of built-in gains was correct), i.e., built in gains become taxable upon the sale of the capital increased shares.

Significant changes to VAT

Pursuant to section 11 para. 12 Austrian Value-Added Tax Act (UStG), a taxable person who has supplied a service and who has stated on the invoice an amount of VAT calculated on the basis of an incorrect rate is no not liable for the part of the VAT invoiced incorrectly if there is no risk of loss of tax revenue because the recipients of that service are final consumers that are not entitled to deduct input VAT.

Based on ECJ case law, if goods are seized and subsequently confiscated when they have already been unlawfully introduced into the customs territory of the European Union, only the customs debt is extinguished but not the import VAT.

Significant changes to the Austrian Federal Tax Code (BAO)

Automated quota system

There have previously been no legal provisions with regard to the quota system for tax advisors. This will change based on the AbgÄG 2023 and the new section 134a BAO:

Generally, tax returns (income tax, corporate income tax, VAT tax returns as well as declaration of assessment) must be submitted by 30 June of the following year (if submitted electronically). However, pursuant to section 134a para. 1 BAO, tax returns of taxable persons represented by tax advisors may be submitted by no later than 31 March of the second calendar year following the assessment period (“automated quota system”). The competent tax office may extend the period to 30 June of the second calendar year following the assessment period, but only for all tax returns that have not been submitted by the tax advisor under the respective quota.

All tax returns stated above are included. Only employee tax assessments are excluded from the quota system, i.e., income tax returns for which income tax has been or would have been levied by payroll deduction.

Section 134a BAO will become effective as of 1 January 2024 and is applicable for the first time to tax returns relating to an assessment period beginning after 31 December 2022.

Section 134a BAO requires the automated quota system to be specified in a regulation by the Austrian Minister of Finance. A draft of such regulation is already available.

Electronic submission of advance rulings

As of 1 January 2024, advance rulings under section 118 BAO may exclusively be submitted via FinanzOnline. However, this obligation only applies if the applicant has an Austrian tax identification number at the time of application.

Administrative simplification for taxes at federal state and municipality levels

As of 1 January 2024, federal states and municipalities will be able to charge taxes amounting to a maximum of EUR 300 via a payment request without any formal requirements (sections 198a and 203a BAO).

Video-supported electronic procedure to establish identity

Section 86a BAO will include a provision that, by regulation, a video-supported electronic procedure may be used to establish the identity of a data subject (online identification). It is intended to be used for first-time registration of a person in the database of the Austrian tax authorities or for issuing as well as resetting login details to FinanzOnline. A draft of the corresponding regulation is already available.

New rules in financial criminal law

Extension of statutory limitation period

For particularly serious financial offences, the statutory limitation period is extended. A ten year statutory limitation period (previously five years) is now provided for tax fraud with fines exceeding EUR 500,000 and for cross-border VAT fraud. Section 31 para. 2 Austrian Tax Criminal Code (FinStrG) will be applicable from the day after announcement in the Austrian Federal Law Gazette.

Jurisdiction: Increase of amounts

The court only has jurisdiction to impose sanctions for financial offences if

• the financial offence has been committed intentionally and the amount determining the penalty exceeds EUR 150,000 (previously: EUR 100,000), or
• if the total of the relevant amounts determining the penalty resulting from several coinciding financial offences committed intentionally exceeds EUR 150,000 and the same authority is competent for all these financial offences.

For certain offences, the amount of EUR 150,000 is replaced by an amount of EUR 75,000 (previously: EUR 50,000):

• Smuggling and evasion of import and export duties (section 35 FinStrG),
• Tax concealment under section 37 para. 1 FinStrG using items or products made from items to which smuggling, evading customs duties or reducing import or export duties has been committed.

Section 53 paras. 1 and 2 FinStrG will be applicable from the day after announcement in the Austrian Federal Law Gazette.