On 12 May 2015, the Austrian Ministry of Finance published the draft for legal appraisal regarding amendments to the Final Taxation Act as well as the banking package. The draft provides for the following amendments:
The Final Taxation Act (“Endbesteuerungsgesetz”) contains a catalogue of types of capital income that are subject to final taxation by levying capital yields tax. No further tax is levied on such income besides the capital yields tax of 25%. According to the draft, this enumeration will be complemented by income from realized capital gains (Sec. 27 para. 3 ITA) and income from derivatives (Sec. 27 para. 4 ITA), which were defined in the amendments to the Income Tax Act in the course of the Federal Budget for 2011. Henceforth, final taxation for these particular types of capital income will be explicitly mentioned in constitutional law.
Capital yields tax rate.
Currently, Austrian law provides a single capital yields tax rate that must not exceed half of the highest income tax rate. This rule will be amended so that different capital yields tax rates may be stipulated. Moreover, the connection to the income tax rate will be abolished and the highest capital yields tax rate would be 27.5 %. It is intended that the tax rate that will be applied on income derived from cash deposits and other comparable claims against banks will remain at its current rate of 25%.
Limitation of the banking secrecy.
By means of the banking package the banking secrecy would be limited so that federal tax authorities get access to bank data via request for information (Sec. 143 FFC), if they have “concerns” regarding the accuracy of tax returns. Access also has to be granted to bank data of other persons, e.g. suppliers or customers if there is the reasonable assumption that such access is of relevance for tax proceedings; in this case the account holder however has to be contacted in advance. Corresponding to this simplified access to bank data for tax authorities, a new Bank Account Register Act (“Kontenregistergesetz”) shall empower the Ministry of Finance to create a federal register of bank accounts and depositories containing the bank account number and personal data of the account holders. The new law would apply to bank account data available from 1 March 2015 onwards.
Preventing capital drain.
According to the draft for the new Capital Drain Reporting Act (“Kapitalbfluss-Meldegesetz”) capital drains amounting to at least EUR 50,000 would have to be reported by the concerned banks. Payments and cash transfers of sight, time and saving deposits as well as donations of capital assets and transfers of capital assets to foreign depositories would be considered as capital drains. The first reporting would be carried out on 31 March 2016 at latest for the period of 1 March 2015 to 31 December 2015.
Automatic exchange of information.
The Common Reporting Standard Act (GMSG) intends the implementation of the Common Reporting Standard concerning automatic exchange of information on financial accounts, which has been developed by the OECD and adopted by the EU through amendments to the EU Administrative Directive. This reporting standard largely corresponds to the intergovernmental FATCA agreements (IGA Model 1) with the United States. For this purpose, the GMSG obliges Austrian financial institutions to report to the tax authority account information of persons subject to reporting, which will subsequently be reported by the Federal Ministry of Finance to the competent authority of the participating countries. Subject to reporting are basically account data of individuals or entities, which are tax residents of states participating in the common reporting standards – which are all EU member states as well as all countries, which will conclude multilateral or bilateral agreements concerning the Common Reporting Standard. Thus, the banking secrecy will be abolished in Austria for these foreign persons.
We will keep you updated on the further developments regarding the legislative procedure.
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