AUSTRIA Law and Practice Contributed by: Raphael Holzinger, Matthias Jancura and Claudia Synek, Grant Thornton Austria
10. Relevance of the United Nations Practical Manual on Transfer Pricing 10.1 Impact of UN Practical Manual on Transfer Pricing The fact that Austria has ratified a number of double taxation conventions in accordance with the United Nations (UN) Practical Manual on Transfer Pricing has a consequential effect on the domestic transfer pricing practices that are in place. However, should the rel - evant double taxation convention adhere to the OECD Model Tax Convention on Income and Capital, the UN Practical Manual on Transfer Pricing exerts a lesser influence – yet it may be utilised in instances where supplementary elaboration on the OECD Model Tax Convention on Income and Capital remains absent. 11. Safe Harbours or Other Unique Rules 11.1 Transfer Pricing Safe Harbours The prevailing ATPG currently incorporate provisions for safe harbours with regard to routine services. In addition to the low-value-adding intra-group services (LVAIGS) concept of the OECD, the ATPG have further adopted the concept of routine services, referring to the EU Joint Transfer Pricing Forum (EU-JTPF) Report on low-value-adding services. Moreover, it is customary practice and also subject to regulation in the TPDA and the ATPG that, for the purpose of documentation, only “significant” cross- border intercompany transactions are to be consid - ered. No legal definition is foreseen regarding the qualification as “significant”; this must be done on a case-by-case basis depending on the facts and cir - cumstances of the case, the size of the business unit and/or other relevant aspects. 11.2 Rules on Savings Arising From Operating in the Jurisdiction The Austrian legislative framework does not incor - porate regulations governing savings that arise from operating in Austria.
The implementation of Pillar Two was adopted by the EU as a directive (EU Directive 2022/2523) in Decem - ber 2022. The Austrian government has implemented the directive within the jurisdiction of the Minimum Taxation Act ( Mindestbesteuerungsgesetz , or Min - BestG). The regulations of the MinBestG are applica - ble to financial years beginning on or after 31 Decem - ber 2023. 9.5 Pillar One Amount B In Austria, the simplified approach under Amount B is not subject to mandatory application. Accordingly, this approach has not yet been applied. Amount B may be implemented in the coming years, but cur - rently this remains uncertain. 9.6 Entities Bearing the Risk of Another Entity’s Operations In Austria, an entity is generally permitted to bear the risk of another entity’s operations and this may take the form of a guarantee, surety or letter of comfort. However, it is imperative that these are in accord - ance with the arm’s length principle; that is to say, the transaction must be conducted through a written agreement that leaves no doubt as to its content and a corresponding remuneration based on the ration - ale of the OECD risk framework (“control over risk”). Consequently, the transaction must also be carried out between third parties under comparable circum - stances. 9.7 Allocation of Profits to Permanent Establishments (PEs) In Austria, the commentary on the OECD Model Tax Convention is generally decisive when it comes to the interpretation of the rules concerning allocation of profits to permanent establishments. Most of its double taxation conventions are based on the ver - sion of Article 7 of the OECD Model Tax Convention as amended prior to 2010 (ie, the OECD Model 2008), which means that Austria only applies an “Authorised OECD Approach (AOA) light”. The AOA is currently only relevant in so far as it does not contradict the OECD commentary on Article 7 as amended prior to 2010 (ie, the OECD Model 2008).
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