Austria: Amortizing goodwill in corporate acquisitions | KPMG | GLOBAL

Austria: Amortizing goodwill in corporate acquisitions, CJEU judgment

Austria: Amortizing goodwill in corporate acquisitions

The Court of Justice of the European Union (CJEU) issued a judgment concluding that Austrian rules that allow, under a group taxation regime, an Austrian parent company to deduct amortization of goodwill resulting from the acquisition of a domestic subsidiary, but deny this tax benefit for participations in EU subsidiaries, are in breach of the freedom of establishment.


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The case is: Finanzamt Linz, C-66/14 (6 October 2015)

Austrian tax law

Under the Austrian group taxation regime, Austrian parent companies—when acquiring a holding in a domestic subsidiary that becomes a member of the group—may benefit from a goodwill amortization in the form of a tax deduction. This tax deduction may not be claimed if a holding in a non-resident company is acquired under the same conditions because Austrian tax law only allows the amortization of goodwill for participations in group companies that are fully taxable in Austria. 

Issues referred to CJEU

The Austrian Administrative Supreme Court referred questions to the CJEU, and the CJEU found that granting goodwill amortization only in respect of newly acquired holdings in resident companies constitutes an undue tax advantage that hinders Austrian parent companies from exercising their freedom of establishment by deterring them from acquiring subsidiaries in other EU Member States. The CJEU concluded that no justification could be found for this in the Austrian tax system. 

KPMG observation

Austria has already taken action and repealed the benefit of the goodwill to resident companies, for acquisitions from 1 March 2014 (transitional rules allow the goodwill amortization to be continued under certain conditions). 


Read an October 2015 report prepared by KPMG’s EU Tax Centre.

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