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Austria‘s Tax Amendment Act 2015
Attribution of income in connection with intermediate corporations
In cases of individuals that render certain services through an intermediate corporation that is under the influence of the individual and does not have an independent business, any income will be directly attributed to the individual.
The regulation covers
- activities of a representative of a corporation (e.g., manager of a public limited company or a private limited company, manager of a private foundation)
- highly personal activities (i.e., artist, writer, scientist, athlete or lecturer)
Equity repayment vs dividend distribution
Until 2015, corporations had an option to treat dividend distributions for tax purposes either as capital repayment (not triggering Witholding tax or WHT ) or dividend distribution (triggering WHT for individuals and under certain circumstances for corporations). With the Tax Reform Act 2015/16 the existing option has been restricted to the extent that in case of a positive status of the internal financing preferentially a dividend distribution has been assumed. In order to requalify a dividend distribution as equity repayment a negative status of the internal financing had to exist.
Due to the Tax Amendment Act 2015, the option has been reintroduced, provided a positive internal financing account (= sum of the annual profits/losses according to local GAAP ) and a sufficient equity account (= sum of contributions of the shareholders) is available. The internal financing account is not influenced by hidden profit distributions, hidden contributions or received repayments of equity. Any profits from a step-up for accounting purposes in the course of a reorganization are recognized once those profits can be distributed.
The new regulation applies to dividend distributions concluded after 31 December 2015.
According to the current exit taxation regime, a deferred taxation is applicable in connection with EU member states or EEA member states with a comprehensive mutual and enforcement assistance agreement. If the transferred assets are not sold within a 10 year observation period, no exit tax will be assessed.
From 2016 onwards, exit taxation could be triggered through the transfer of assets, the relocation of a permanent establishment or other circumstances (e.g., conclusion/change of DTT) and any exit tax has to be paid in instalments (7 years for fixed assets, 2 years for current assets).
For specific types of income of private foundations, an interim taxation regime applies. The tax base for the interim taxation may be reduced by distributions to beneficiaries during the same period.
In the past, distributions to foreign beneficiaries reduced the tax base for the interim tax if WHT has been deducted and no refund has been affected on the basis of the applicable DTT. From 2016 onwards, distributions that are partly exempt from WHT could insofar be recognized for the reduction of the interim tax.
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