The Austrian Administrative Supreme Court issued judgments that address the treatment of certain situations concerning the application of the Austrian corporate group taxation regime rules.
The Austrian Administrative Supreme Court decided that when the tax result of a corporate group member “reaches” the group parent at a point in time (caused by different balance sheet dates) when the parent corporation has already left the group or became a group member of a new group, the tax results of the group member cannot be allocated to the “old” group parent. The group member must be taxed on a stand-alone-basis for the respective fiscal year.
Under the Austrian group taxation regime, in general, tax results of the group members are pooled on group level. Thus, the taxable results of domestic group members are attributed to the group parent. If the group member´s balance sheet date is different from that of the group parent, the tax results of the group member will be attributed and taxed in that parent´s fiscal year in which the group member´s balance sheet date relates. This may lead to a timing gap—the tax result of a group member of a fiscal year may be added to the parent´s result of another fiscal year.
The Austrian Administrative Supreme Court issued a judgment addressing the treatment under the Austrian group taxation regime when in a reorganization, a group member (corporation) is reorganized into a newly founded partnership.
Under the Austrian group taxation regime, a partnership (in the legal form of an OG, KG) cannot be a group member of an Austrian tax group. Partnerships are tax-transparent for (corporate) income tax purposes (that is, the income is allocate to the shareholders of the partnership for (corporate) income tax purposes). The minimum holding period in Art 9 Sec 10 of Austrian corporate income tax law stipulates that if a group member leaves the tax group within three years after entering the group, it must be taxed on a stand-alone basis, with retroactive effect (i.e., it will be taxed as if it had never been in the group).
The Austrian Administrative Supreme Court decided that when a group member (a corporation) is “conversed” into a newly founded partnership before satisfying the three year threshold for being a group member, the corporation would not be taxed on the stand-alone basis, retroactively, when the tax group is continued with other group members.
Read a September 2017 report [PDF 332 KB] prepared by the KPMG member firm in Austria
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.