14 February 2020
The Austrian Federal Finance Court issued a decision that rejected the position of the tax authorities regarding whether a tax group “collapsed“ when one member of the corporate tax group was sold to a third party after other participations were contributed to the parent company.
Under the Austrian corporate tax group rules, a major requirement for applying the group taxation regime is that the qualifying participation must be held for the entire financial year of the group member (restructurings within a tax group will not disqualify application of the group rules if qualifying participations in the group members are still held for the entire respective financial year). Furthermore, the group regime requries that an Austrian tax group must exist for at least three years.
In the case before the Federal Finance Court, there was a group parent company and two group members.
The Austrian tax authorities determined that the entire group “collapsed“ because Company B did not satisfy the requirements for qualifying participations in relation to the group parent company.
The Austrian Federal Finance Court disagreed with the tax authorities, and instead found that the taxpayer group did not collapse because there was at least one group member left (Company B) that satisfied the requirements for qualifying participations, given that the contribution in-kind was an intra-tax group transfer that was not harmful.
KPMG observation: The tax authorities have already filed an appeal of this decision with the Austrian Administrative Supreme Court.
For more information, contact a tax professional with the KPMG member firm in Austria:
Markus Vaishor | +43 1 31332-3652 | firstname.lastname@example.org
Read a February 2020 report prepared by the KPMG member firm in Austria
Other items discussed in the KPMG report include brief descriptions of the following developments: