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Austria: Treatment of tax loss carryforwards, change in organizational structure

Austria: Treatment of tax loss carryforwards

The Austrian Federal Finance Court issued a decision concerning the ability of a company to carry forward its tax losses in instances when there is a change in the organizational structure of the taxpayer company.

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In general, an Austrian company’s tax losses can be carried forward indefinitely. However, under the loss trafficking rules (Mantelkauf), tax loss carryforwards may be disallowed if there is a “significant” (that is a greater than or equal to 75%) change in the direct shareholder structure followed by a change of the organizational and economic structures of the company. A change of the company’s directors or managers generally is deemed to be a change of the organizational structure.

The Ministry of Finance previously issued a tax opinion that there was a change of organizational structure when the previous directors continue to serve as directors in a formal capacity, but they have no more “factual” authority to make decisions. 

The Federal Finance Court agreed with the position of the Finance Ministry. In the case before the court, an authorized signatory for the company had “factually” been running the affairs of the company prior to his appointment as a director. The court held that there was no change in the organizational structure, even though a previous director resigned, because the “factual” director did not change.

 

Read a February 2018 report [PDF 333 KB] prepared by the KPMG member firm in Austria

 

Other items briefly discussed in this report concern:

  • Recognition of additional tax claims—timing
  • Rate of value added tax (VAT) for a single supply
  • Real estate transfer tax in instances of a transfer of a claim to shares
  • When does an employee’s home office give rise to a permanent establishment
  • Allocation of acquisition costs of real estate for non-business income

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