AUSTRIA Law and Practice Contributed by: Raphael Holzinger, Matthias Jancura and Claudia Synek, Grant Thornton Austria
written agreements, the economic ownership is relevant. • VwGH 4 September 2014, Ra 2012/15/0226 – for a functional allocation to the permanent establish - ment, the core activity must be carried out in the source state, whereby the place of work typical for the job profile is decisive. • VwGH 20 October 2009, Ra 2006/13/0116 – if an arm’s length price cannot be determined using the comparable uncontrolled price method, the service of the permanent establishment will generally have to be invoiced at a transfer price determined using the cost-plus method or the cost-based TNMM. A comprehensible justification is required for the definition of the profit mark-up. • VwGH 17 March 2021, Ra 2020/15/0113; 27 November 2020, Ra 2019/15/0162; 19 April2018, Ra 2017/15/0041; 26 January 2012, Ra 2009/15/0032; 28 January 2003, Ra 99/14/0100 – a particularly precise service description is required in situations where the purpose of the contract is to provide complex services (eg, efforts, advice, know-how transfer). The documentation must enable an expert third party to verify within a rea - sonable period of time whether and to what extent the delimitation of income between the taxpayer and the affiliated company complies with the prin - ciple of arm’s length behaviour. For this purpose, the services rendered and remunerated must be presented in detail and recorded in concrete terms. • VwGH 26 November 2015, Ra 2012/15/0023 – a low-risk distributor is generally characterised by the purchase and sale of goods. Generally, a low- risk distributor also has its own customer base as it is operating in its own name and on its own account. • VwGH 8 July 2009, Ra 2007/15/0036 – as regards group allocations, the essential statement from a transfer pricing perspective is that the mere sub - mission of documentary evidence is not sufficient to prove the provision of services (ie, the so-called benefits test) if the specific content of the services and the specific value of the services cannot be clearly determined from such documents. • VwGH 26 February 2004, Ra 99/15/0127 – there is no procedural provision that would require the tax assessment to be made only after a (requested) mutual agreement procedure has been concluded.
• VwGH 18 December 2019, Ra 2018/15/0025 – if the legal requirements of Section 48 of the FFC (ie, Austrian provision regarding potential unilateral relief from double taxation) are met, it is at the dis - cretion of the ATA to order the de-taxation provided for therein. • UFS 30 July 2012, RV/2515-W/09 – regarding benchmark studies and the transactional net margin method, in cases where the price deter - mined by the taxpayer is outside the range of arm’s length values, the ATA must make an adjustment to a point within the range. It may be appropriate in such cases to choose the median, especially if no other value within the range is more reliable. • BFG 11 July 2014, RV/7101486/2012 – this con - cerns the arm’s length nature of the charged man - agement fees. • BFG 22 November 2018, RV/2100386/2017; UFS 6 April 2007, RV/4687-W/02 – regarding the profit mark-up of intercompany services, accordingly, services with a routine character cannot always easily be charged with a profit mark-up of 5%. Hence, a mark-up of 10% might be considered as more appropriate in some cases (such as in the case of this decision). • UFS Feldkirch 20 May 2011, FSRV/0015-F/10 – this concerns negligent reduction of customs if a declared customs value is obviously not in line with the arm’s length principle. • UFS Wien 2 October 2006, RV/0362-W/02 – this concerns the determination of transfer prices on a flat-rate basis and start-up losses. • BFG 21 October 2020, RV/5100965/2018 – this concerns: (a) management fees and the cost base, which should generally include all expenses in rela - tion to the service provided (excluding pass- through costs and shareholder activities); and (b) the profit mark-up, which is based on the value added through the service provided. • BFG 27 March 2020, RV/7105894/2018; 2 August 2018, RV/7102556/2017 – this concerns transfer pricing adjustments from an Austrian procedural perspective. • UFS Graz 7 March 2012, RV/0171-G/08 – this concerns distribution business units and the esti - mation of expenses (purchase of goods) within the meaning of Section 184 of the FFC.
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