Austria: Expensing vs. capitalizing acquisition costs, other topics

Austria: Expensing vs. capitalizing acquisition costs

The KPMG member firm in Austria has prepared a report of recent developments concerning court cases, tax regulations, and tax benefits. Taxpayers that may want to apply the holdings in these court cases or administrative rules may need to take certain steps before the end of 2015.

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Read a December 2015 report prepared by the KPMG member firm in the Austria: Year-End Tax Planning Tips 2015


The items briefly described in this report include:

Income tax treatment of due diligence and consulting expenses related to the acquisition of shares—a taxpayer-favorable decision of the the Austrian Federal Tax Court (BFG), that the taxpayer’s decision to acquire a participation was made at the time the share purchase agreement was concluded. Accordingly, expenses incurred before that time for consulting and conduction of a due diligence were deductible and did not have to be capitalized as part of the acquisition costs of the participation.

Draft ordinance on deemed portion of land in total acquisition costs of real properties—the percentages for depreciation of real property are dependent on the location and type of building.

Austrian Federal Tax Court decision on “capitalistic interest in a partnership”—limited partners in a partnership that are “economically active” are allowed to pay half the tax rate in the event they sell their partnership interest or cease their business activity.

Other topics in the KPMG report concern the following:

  • Correction of balance sheets for tax purposes according to Art 4 sec 2 Austrian income tax act – effectiveness of the rule?
  • Allocation of seconded employees to permanent establishment of temporary employer for Austrian municipal tax purposes
  • Optional continued insurance in Austria´s pension scheme additionally to compulsory foreign pension insurance possible as from the beginning of 2016 
  • Draft tax amendment act 2015: VAT margin taxation for travel services

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