AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler, Schindler Attorneys
Section 22 of the Federal Fiscal Code The first provision is Section 22 of the Federal Fiscal Code, which is based on the “anti-abuse” doctrine that prohibits the abuse of law (as established by the jurisprudence of the Austrian Supreme Administrative Court). According to this provision, an abuse of law occurs if – with regard to the targeted goal – a legal structure has an unusual and inappropriate charac - ter, and can be explained only by the intention of tax avoidance. Whether the structure remains meaningful without the tax minimisation effect must be assessed. Note that tax rulings can be obtained regardless of whether or not Section 22 of the Federal Fiscal Code applies. Section 21 of the Federal Fiscal Code This second provision is based on the “substance over form” doctrine and provides that, for the pur - pose of evaluating tax structures under an economic approach, the formal appearance is not essential, but the actual economic substance of the facts and cir - cumstances is essential. Common Reporting Standard, DAC6 and FATCA Austria has adopted various legislative measures with regard to the Common Reporting Standard, which were often driven by corresponding EU Direc - tives and/or Regulations, or were part thereof. The exchange of information with third countries is there - fore often based on double taxation treaties, and a robust legal framework for tax information exchange exists within the EU. With respect to DAC6, Austria has recently adopted legislation to implement reporting obligations for potentially aggressive tax planning schemes ( EU - Meldepflichtgesetz , or EU-MPfG). The scope of the Austrian EU-MPfG corresponds to the text of DAC6, stating that an intermediary is required to report only cross-border tax arrangements. Domestic tax arrangements that relate to taxes set out in DAC6 are not subject to the EU-MPfG, so are not reportable. It should be noted that, under the recent EU Omni - bus proposal published by the European Commission, amendments have been proposed to simplify certain DAC directives. If adopted, these changes may also
affect the scope and application of the corresponding rules in Austria in the future. In 2014, Austria (like many countries worldwide) entered into an Intergovernmental Agreement with the USA (the US Foreign Account Tax Compliance Act, or FATCA), which means that all domestic financial institutions will have to report specific data on persons and accounts, and the custody account details of per - sons that are subject to US tax to the IRS. Public Beneficial Ownership Registers Like other EU member states, Austria implemented a public beneficial ownership register ( Register der wirtschaftlichen Eigentümer ) in 2018 on the basis of an EU Directive. The register was open to the general public until 2022, when the CJEU ruled that the pub - lic access provisions violated certain EU fundamental rights (eg, respect for private life). Under the current rules, certain authorised parties are entitled to inspect the register. In addition, any person or organisation is granted access to the register if they can demonstrate a legitimate interest in doing so. 2. Succession 2.1 Cultural Considerations in Succession Planning The desire of the older generation to determine and control the future allocation of their wealth is a com - mon factor in succession planning. Several legal tools are used to safeguard a family’s wealth. Firstly, the transfer of assets inter vivos is often combined with requirements and conditions in favour of the older generation, such as provisions prohibiting transfer and disposal or the right to usufruct. Secondly, the installa - tion of executors of the last will and the establishment of private foundations are used to prolong control over family assets. 2.2 International Planning International estate planning has become increasingly important in the last couple of years. The key factor in addressing the relevant legal and tax provisions is to initiate a timely engagement regarding estate plan - ning. Legal provisions such as forced heirship or taxes may require estate planning transfers inter vivos or the
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