Niklas Schmidt & Eva Stadler | Wolf Theiss
1. Introduction
As is the case in most countries in the world, tax law is rather complicated also in Austria. Fortunately, there exist several types of tax rulings. Ruling procedures aim at increasing planning certainty for taxpayers, in order to make Austria an even more attractive business location and place to live.
2. Legally binding formal tax rulings
Austrian law provides for legally binding formal tax rulings (Auskunftsbescheide). They can be applied for in connection with corporate restructurings, tax groups, international tax law, value added tax, and the existence of abuse of law. They are issued upon a taxpayer's written request, which must, inter alia, contain a comprehensive and consistent description of the envisaged transaction, an explanation of the taxpayer's vested interest in receiving the ruling, specific legal questions, and a comprehensive analysis of the legal issues raised.
The competent tax office must issue a formal tax ruling. Such ruling must contain the facts and statutory provisions on which it is based, a legal assessment of the facts, and the time frame during which it is valid. In addition, the taxpayer may be required to report on whether the facts of the case have been implemented as planned.
Obtaining such a formal ruling (irrespective of whether the result is in line with the taxpayer's view or not) involves administrative costs amounting to EUR 1,500 to EUR 20,000. If the facts presented in the request do not, or only insignificantly, deviate from the facts implemented, the taxpayer has a legal right vis-à-vis the tax office to be treated according to the tax ruling. The ruling is not published.
3. Quasi-binding tax rulings
Further, quasi-binding tax rulings exist regarding all types of tax questions. A tax ruling in this sense is the statement provided in writing by a tax office upon a taxpayer’s request as to the tax implications of a particular situation described by the taxpayer. The statement may be made in reliance on the general duty of public bodies to provide information on matters within their scope of responsibility or on the basis of an explicit statutory provision.
Such statements have no legally binding effect. Nevertheless, the taxpayer may still under certain circumstances be protected by the general principle of equity and good faith. This is an unwritten maxim applicable to all persons participating in legal relations. It means that every person shall stick to their own words and actions and shall not without cause behave contrary to what they have announced beforehand and upon what others have relied.
In connection with such a tax ruling retroactively found to be incorrect (for example, in the course of a later tax audit), the principle of equity and good faith applies if the following prerequisites are fulfilled: (i) the tax ruling has been rendered by the competent tax authority, (ii) the tax ruling is not patently incorrect, (iii) the incorrectness of the tax ruling was not easily noticeable for the taxpayer, (iv) relying upon the correctness of the tax ruling obtained, the taxpayer has made dispositions/transactions which they would not otherwise have made or would have made differently if they had known about the incorrectness of the tax ruling and (v) taxation contrary to the tax ruling would result in damage for the taxpayer.
Under these circumstances it is possible for the tax authority to grant a tax waiver, which in essence is an act of discretion. Thus, this type of tax ruling is quite similar to a legally binding ruling. No administrative costs are involved. The ruling is not published.
4. Anonymous public tax rulings
In international tax matters, apart from the competent tax office, also the Austrian Federal Minister of Finance can be asked for a tax ruling (a so-called "EAS ruling"). Such a ruling is usually obtained anonymously and has even less legal effect than the quasi-binding rulings outlined above. This means that the taxpayer cannot rely on the principle of equity and good faith in respect of such rulings.
Nevertheless, they have an important guidance function and are usually complied with by the tax offices. No administrative costs are incurred. These rulings are regularly published on a no-name basis.
Wolf Theiss
Niklas Schmidt - Partner (niklas.schmidt@wolftheiss.com)
Eva Stadler - Counsel (eva.stadler@wolftheiss.com)
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