AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler and Mohamed Hemdan, Schindler Attorneys
1. Sources and Principles 1.1 Domestic Sources of International Tax Law The main sources of international tax law in Austria can be summarised in three categories: • domestic rules dealing with international tax law matters, generally referred to in Austria as “foreign tax law” ( Außensteuerrecht ); • international law, of which double taxation treaties (DTTs) are the most important example; and • EU law. Domestic provisions dealing with international tax law matters ( Außensteuerrecht ) are not codified in a sin - gle law; rather, the individual provisions can be found throughout the various tax laws. For example: • rules on determining foreign income and recognis - ing foreign losses can be found in the Income Tax Act; • rules on distributing dividends between interna - tional intercompany shareholdings can be found in the Corporate Income Tax Act; and • rules on granting potential unilateral relief from double taxation can be found in the Federal Fiscal Code, etc. Under Austrian federal constitutional rules, where international treaties are accessible for direct appli - cation within the domestic legal system (as is the case with DTTs), the process of transformation – ie, incor - poration into domestic law – is carried out through what is known as the “general transformation of inter - national law”. This means that transformation occurs without the need to specifically implement the DTT into domestic law through the enactment of further legislation. International tax law cases are adjudicated by Aus - trian courts – in particular, the Federal Fiscal Court and, on appeal, the Supreme Administrative Court. In their roles, the courts provide authoritative interpreta - tion of the applicable sources of international tax law. Where a case involves the application of EU law, the jurisprudence of the CJEU may also provide (binding)
guidance for the (EU-conforming) interpretation of the respective legal sources. Additionally, the Austrian Ministry of Finance (MoF) issues extensive administrative guidelines on interna - tional tax law matters, including so-called “Express Reply Services” (EAS), which provide (non-binding) opinions of the MoF on specific requests relating to international tax law. While not legally binding on the requesting taxpayer or the tax authorities, these opin - ions are highly influential in practice. Austria maintains an extensive treaty network, hav - ing concluded more than 90 DTTs. Most of Austria’s treaties are based on the OECD Model Tax Conven - tion and follow the standard allocation of taxing rights, with certain minor modifications. 1.2 Hierarchy of Sources In general, tax treaties have the status of ordinary legislation in the Austrian legal system and are there - fore equal in rank to domestic laws. However, based on the principles of lex posterior (newer laws prevail over older ones) and lex specialis (more specific laws prevail over general ones), tax treaties generally take precedence over domestic tax provisions. While conflicts (ie, treaty override) may technically arise when domestic legislation is introduced subse - quent to a treaty, in practice the tax authorities and courts aim for a harmonious interpretation that avoids open conflict between treaty law and domestic law. EU law holds a special position, as it takes prece - dence over domestic law in areas covered by the EU treaties and directives. This means that domestic rules must be interpreted and applied in conformity with EU law, and, where necessary, domestic provisions may be overridden to comply with EU law. 1.3 OECD Model/United Nations Influence on Treaty Practice Austria’s tax treaties generally follow the OECD Model Tax Convention, with certain minor modifications. 1.4 Multilateral Instrument In June 2017, Austria signed the Multilateral Instru - ment (MLI), and in September 2017 it deposited its
30 CHAMBERS.COM
Powered by FlippingBook