Government bill of the Austrian Transfer Pricing Documentation Act published

On 14 June 2016 the government bill of the Transfer Pricing Documentation Act was presented by the Council of Ministers. In comparison to the consultation draft (for details please see our Breaking Tax News No. 3), the government bill foresees significant simplifications, especially with regard to the reporting language but also concerning penalties.

Definitions.

Instead of using the ambiguous German translations of the consultation draft, the government bill refers directly to the terms “Master File” and “Local File”. For the Country-by-Country (CbC) Report, a new term (“Länderbezogener Bericht”) was introduced. Furthermore, it has been clarified that only fully consolidated companies have to be included into the CbC Report.

Thresholds.

Despite numerous comments, inter alia from the Austrian Chamber of Public Accountants, the threshold in the amount of EUR 50 million turnover for the obligation to prepare and submit the Master File and the Local File remained unchanged. What is new, however, is that the documentation obligation only applies if the threshold is exceeded for two consecutive fiscal years. Vice versa, if the revenues fall short of the threshold twice in a row, the documentation duty ceases. Furthermore, the controversial provision requiring Austrian entities to prepare Master File and Local File, if commission revenues generated with foreign affiliated entities amounted to more than EUR 5 million in the preceding year, was abolished.

Language.

The fact that – contrary to the consultation draft – the entire documentation now can be conducted either in German or English language represents a welcome development.

Assumption of the parent’s duty to submit a CbC Report.

Generally, an Austrian entity assuming its foreign ultimate parent’s obligation to file a CbC Report has to gather all information necessary to fulfill its reporting duty from its ultimate parent company. However, if the latter fails to provide the required data, the Austrian entity has to notify the responsible tax authority and submit a CbC Report on the basis of all information available.

Penalties.

With regard to penalties associated with CbC Reporting, the maximum fine for intentional violations of the reporting duty was reduced from EUR 80,000 to EUR 50,000. The penalty range for grossly negligent violations remained unchanged.

Comments.

It is appreciated that the legislator has considered some of the propositions made after the publication of the consultation draft. Nevertheless, the government failed to incorporate further clarifications and simplifications (like the introduction of transaction-specific thresholds) and also the ambiguous provision, according to which existing documentation duties remain unaffected by the Transfer Pricing Documentation Act, has not been deleted. Overall, the bottom line is that Austrian entities now have a clear picture of their future documentation duties and should start implementing the respective documentation processes as soon as possible. The final legislation remains to be seen.

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Andreas Gregshammer

Andreas Gregshammer

Assistant| SteuerberatungDeloitte Tax | Telefon:+43 1 537 00 5637 | E-Mail senden

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