Guidance on DAC6 by the Austrian Ministry of Finance (BMF) updated
On 12 September 2023 the BMF published an update on the Austrian DAC6 guidance which has been long anticipated. In addition to clarifications the guidance includes further explanations on hallmarks, on information of other intermediaries as well as on the content of the report.
Background
In mid-October 2020 the Austrian BMF has published a guidance on the application of the European Union Reporting Requirement Act (EU-MPfG). This guidance provides key indications on the interpretation of the content of the EU-MPfG. Barely three years after the reporting requirement entered into force, the BMF has now updated the guidance for the first-time. Several interpretation issues which in part were also discussed in the context of a vote at EU level were the reason for the update.
What are the amendments?
Next to clarifications regarding classification as auxiliary intermediary as well as the calculation of the tax advantage, the updated guidance includes further additions to selected hallmarks:
- transfer pricing arrangements using unilateral safe harbour rules (section 5 subsec. 7 EU-MPfG; hallmark E.1)
- transfer of hard-to-value intangibles (section 5 subsec. 8 EU-MPfG; hallmark E.2)
- transfer pricing arrangements with EBIT reduction (section 5 subsec. 9 EU-MPfG; hallmark E.3)
- general illustrations on the main benefit test
- conversion of income (section 6 subsec. 5 EU-MPfG; hallmark B.2)
- round tripping (section 6 subsec. 6 EU-MPfG; hallmark B.3) and
- deductible cross-border payments made between associated enterprises (section 6 subsec. 7 EU-MPfG; hallmark C.1)
There are no big surprises, but it is apparent that the tax administration is stricter in its interpretations of the single hallmarks. Followingly, several significant amendments and additions are emphasised.
The guidance specifies for instance that there is a reporting requirement for a transfer of hard-to-value intangibles even if the hard-to-value intangibles are transferred as part of a larger transaction and only account for a small part of the total transaction (e.g. smaller patents, inventions by employees or similar which are sold or contributed as part of an asset deal).
The guidance includes extensive amendments especially on transfer pricing arrangements with EBIT reduction (hallmark E.3). Thus, the guidance clarifies how to calculate EBIT reduction, that in case of universal succession (e.g. in case of cross-border mergers or liquidations) the EBIT of the legal successor is not the basis and that the hallmark is also to be used for already liquidated entities or entities with negative EBIT. Moreover, this also applies to cases of larger HTVI being transferred.
Based on the CJEU’s ruling C-694/20, amendments regarding the right to a waiver from the reporting requirement (section 11 EU-MPfG) were incorporated in the guidance. The BMF now declares in the guidance that the requirement to inform other participating intermediaries of the arrangement and the duty of secrecy is not applicable anymore based on this ruling. Thereby, the BMF expands the non-applicability of the reporting requirement to all intermediaries (tax advisors, banks etc.). However, the corresponding legal adaptation is still outstanding.
Finally, the BMF guidance refers to the content of the report by providing several clarifications on the value of the arrangements. Thus, the value of the arrangement is to be calculated not taking into account transactions that (partly) offset or cancel each other.
Outlook
The BMF guidance provides further clarifications on the interpretation of the EU-MPfG’s content. We recommend you familiarise yourself with the new explanations and to consider the issue DAC6 when planning cross-border transactions or structuring. We are happy to provide support and advice on this topic and we will keep you updated on significant developments regarding DAC6.
Author: Sophie Schönhart
