Austria: Corporate group taxation rules | KPMG | GLOBAL

Austria: High court addresses corporate group taxation rules

Austria: Corporate group taxation rules

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.

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Attribution of tax results of domestic group members to parent corporation, different balance sheet dates

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. 

Group tax treatment, group member reorganized into partnership

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

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