AUSTRIA Law and Practice Contributed by: Raphael Holzinger, Matthias Jancura and Claudia Synek, Grant Thornton Austria
7. Advance Pricing Agreements (APAs) 7.1 Programmes Allowing for Rulings Regarding Transfer Pricing The Austrian system incorporates an APA programme, encompassing unilateral measures (referred to as “advance ruling”) in addition to bilateral and multilat - eral measures. A bilateral and multilateral APA can be required to clarify the basis for transfer pricing for transactions falling under Article 7 or Article 9 of the OECD Model Tax Convention on Income and Capital and to clarify how the profits realised are distributed among the tax jurisdictions concerned. A bilateral and multilateral APA may concern transfer pricing issues of one or more taxpayers or be limited to individual intra-group transactions. A bilateral and multilateral APA is thus a formal written agreement between the ATA and the tax authorities of a treaty partner state, with the aim of governing the appropriate transfer pricing method and transfer prices for a forward-looking period (usu - ally three to five years). In other words, a bilateral and multilateral APA is concluded for future years and transactions. The initiation of bilateral and multilateral APAs is typi - cally pursued by the taxpayer concerned. Neverthe - less, the taxpayer possesses no legal entitlement to the successful execution of the APA in question. It is important to note that the resolution of bilateral and multilateral APAs is often a process that extends over several years. It is evident that bilateral and multilateral APAs are grounded in the framework of the mutual agreement procedure articles of the relevant double tax treaties, as outlined in Article 25 of the OECD Model Tax Con - vention on Income and Capital. Consequently, the absence of domestic regulations pertaining to bilateral and multilateral APAs is notable. Unilateral advance rulings can be requested by the taxpayer on the basis of Section 118 of the FFC in the case of international tax topics, including transfer pric - ing topics. However, it is to be noted that a unilateral advance ruling can only be requested for future fact
patterns, meaning that the facts of the case must not already have been implemented. 7.2 Administration of Programmes The Austrian Ministry of Finance administers the pro - gramme. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures As mentioned in 7.1 Programmes Allowing for Rul- ings Regarding Transfer Pricing and stated in Article 25 of the OECD Model Tax Convention on Income and Capital, bilateral and multilateral APAs are based on the mutual agreement procedure articles of the respective double taxation conventions. If negotia - tions on mutual agreement procedures (for the past) and APAs (for the future) take place at the same time for the same fact pattern, they are usually combined. 7.4 Limits on Taxpayers/Transactions Eligible for an APA The scope of the respective double taxation conven - tion imposes limitations on bilateral and multilateral APAs with regard to future transactions that fall under Article 7 or Article 9 of the OECD Model Tax Conven - tion on Income and Capital. However, in cases where a past fact pattern is concerned, the APA would then simply be a mutual agreement procedure. Unilateral advance rulings according to Section 118 of the FFC are available for several tax areas, includ - ing “international tax law”, which also covers transfer pricing issues. However, the ATA typically do not con - firm the correctness of specific transfer prices under particular facts and circumstances in such unilateral advance rulings. They usually only give answers to legal questions raised by taxpayers that will occur in future cases, if the legal questions are of particular interest. In instances where the underlying facts and circumstances are identical or only differ margin - ally upon materialisation, the result of the unilateral advance ruling becomes legally binding for the ATA. According to the law, the ATA are required to conclude a unilateral advance ruling case within a maximum period of two months after filing of the ruling request; however, in practice, this waiting period is often sig - nificantly longer.
16 CHAMBERS.COM
Powered by FlippingBook