Update on Corporation Tax Law and Real Estate Taxation
The recently adopted 2014 Tax Amendment Act (Abgabenänderungsgesetz 2014) includes important changes affecting corporations as well as concerning company law. In addition, the bill for the 2014 Budget Accompanying Act (Budgetbegleitgesetz 2014) has been completed; it contains new provisions regulating real estate tax.
On 24 February 2014, the federal government adopted the 2014 Tax Amendment Act (Abgabenänderungsgesetz 2014, AbgÄG 2014), which, in particular, places restrictions on the Austrian group taxation regime: It abolishes goodwill amortisation; in cases where this has already been initiated, it may only be continued under certain conditions. Furthermore, only companies from certain countries are now admissible as non-Austrian group members; existing groups therefore have to be adjusted. The Amendment Act also introduces restrictions on the offsetting of losses. In addition, certain deductions (for top salaries and severance payments as well as for interest and royalty payments within the group) are now prohibited. Finally, the business form known as “GmbH light” (limited liability companies for which only half of the minimum share capital, i.e. EUR 5,000, must be paid up in cash) is no longer an option, although a newly invented “founding privilege” (Gründungsprivilegierung) relaxes the rule for start-ups.
Some of the changes, above all the prohibited deductions, appear to be unconstitutional and could therefore be legally combated. Misgivings as to their compatibility with EU law have also been expressed.
According to the bill of the 2014 Budget Accompanying Act and its amendment of the real estate tax rules, the market value of a property is generally to be used as the assessment basis for real estate purchases in future. Purchases within a family, however, are privileged. The promised harmonisation of the real estate purchase assessment basis with the fees for entry in the land registry has only been realised in part. Restructurings within a group, in particular, could become more expensive as of June 2014.
Our early bird seminar “Update Konzernsteuerrecht und Grunderwerbsteuer” provides an overview of the changes in tax law and calls attention to the possible need to make adjustments within companies. As far as real estate purchases are concerned, it could be expedient to make transfers before the new law enters into force on 1 June 2014.
Speaker
Christian Wimpissinger, Partner
Verena Heffermann, Attorney at Law