AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler and Mohamed Hemdan, Schindler Attorneys
trian tax law. Taxpayers may be selected at random for a tax audit; however, if there are significant discrepan - cies between tax returns submitted in individual years, the likelihood of being selected increases. During a tax audit and/or investigation, the tax authori - ties are entitled to review the taxpayer’s accounting records, books and supporting documentation, and may request further information from the taxpayer. In this context, a particular role is played by the Aus - trian Fiscal Police, which operates as a specialised unit on behalf of the tax authorities. The Fiscal Police will typically become involved where immediate action is required – eg, in situations where information must be obtained without delay. Accordingly, they may be authorised to enter the taxpayer’s premises, verify identities, question third parties (eg, employers, busi - ness partners, banks, etc) and carry out seizures. However, the Fiscal Police will not conduct a “regular” tax audit themselves; these are generally carried out by the audit units of the relevant tax office. In this respect, it is important to distinguish between the type of tax audit concerned: • “regular” tax audits as part of the administrative proceedings, which may apply to every taxpayer; and • fiscal criminal audits that are only carried out where there is an indication of a fiscal criminal offence. In general, taxpayers are required to co-operate during a “regular” tax audit, especially in cross-border situa - tions where the obligation to co-operate is increased. However, during a tax audit under fiscal criminal law or tax investigations relating to criminal proceedings concerning tax offences, the taxpayer (ie, the accused person) is under no obligation to co-operate with the tax authorities.
of tax that would have been due had the abusive structure not been implemented (plus any applicable surcharges, penalties and interest). That said, certain provisions are particularly relevant in a cross-border context – including, for instance, the arm’s length principle under Austrian transfer pricing rules, which may limit deductible expenses or lead to an upward adjustment of the tax base, as well as sanctions for violations of reporting obligations under the Austrian implementation rules of DAC6, which applies for certain cross-border arrangements. It may also be worth noting that international activi - ties such as reorganisations, intra-group cross-border transactions and transfer pricing matters are often given more attention during tax audits, inter alia due to international efforts to combat tax evasion and pre - vent BEPS. The competent tax offices are responsible for impos - ing and enforcing such measures – eg, reassessment of taxes due. In the event of an appeal by the taxpayer, the case falls within the jurisdiction of the Federal Fis - cal Court, which may assess taxes due plus penalty surcharges. Importantly, however, a distinction must be made between cases of impermissible tax avoid - ance or tax offences below the threshold of fiscal criminal law on the one hand, and fiscal criminal pro - ceedings on the other hand. The latter are covered in 6.2 Criminal Penalties and 6.3 Interaction Between Tax and Criminal Procedures . 6.2 Criminal Penalties Austrian criminal tax law distinguishes between two types of fiscal criminal proceedings: • administrative fiscal criminal proceedings (ie, tax authorities deal with the case); and • judicial fiscal criminal proceedings (ie, the case falls within the jurisdiction of the criminal courts). As a general rule, the competence depends on the seriousness of the offence. Less severe cases fall within the jurisdiction of the tax authorities acting as fiscal criminal authorities, whereas more serious offences are dealt with by the ordinary criminal courts. In particular, the tax authorities are competent in cas -
6. Penalties and Sanctions 6.1 Tax Penalties
Impermissible tax avoidance – whether arising from cross-border transactions or purely domestic situa - tions – may generally result in a reassessment of the tax liability, leading to the assessment of the amount
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