Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Austria

Austria has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) except for the timely exchange of information on past and future rulings (ToR II.5.6). As such, the recommendation made in the prior year peer review report remains in place. Austria is recommended to ensure that all information on past and future rulings is exchanged as soon as possible. In the prior year review report, Austria was recommended to ensure that information on all potential exchange jurisdictions is obtained. Austria has now put in place the process and was able to identify information on all potential exchange jurisdictions and as such the recommendation is removed.

Austria can legally issue one type of rulings within the scope of the transparency framework.

In practice, Austria has issued 59 past rulings;1 for the period 1 April 2016 – 31 December 2016, Austria issued 13 future rulings; and for the year in review, Austria issued 10 future rulings within the scope of the transparency framework.

No peer input was received in respect of the exchanges of information on rulings received from Austria.

1. In the prior year peer review, Austria reported that it had issued 63 past rulings, however subsequent analysis clarified that this incorrectly included cases such as withdrawn ruling request and test files.

Introduction

74.  This peer review covers Austria’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

75.  Austria can legally issue one type of rulings within the scope of the transparency framework: cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles. In Austria, 39 competent local tax offices are authorised to issue opinions.

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

76.  For Austria, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2014 but before 1 April 2016; or (ii) on or after 1 January 2010 but before 1 January 2014, provided they were still in effect as at 1 January 2014.

77.  In the prior year peer review report, it was determined that the Austrian tax administration’s undertakings to identify past rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. The Austrian tax administration’s implementation in this regard remains unchanged except that for the year in review, the Audit Unit for Large Traders is now responsible for the collection of all past rulings from the local tax offices as well as verification for exchange purposes.

78.  Austria reported that there was an error in counting the past rulings in the prior year peer review. The error was detected during a review process carried out by Austria. Austria had reported that there were 63 past rulings, which was counted based on the number of files, whereas after a review the correct number of 59 past rulings was confirmed. The four over-reported cases appeared on account of ruling requests, which were withdrawn, test files or not subject to exchange. The review process has verified that there are no additional errors in the identification of past rulings, and therefore continues to meet the minimum standard.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

79.  For Austria, future rulings are any tax rulings within scope that are issued on or after 1 April 2016.

80.  In the prior year peer review report, it was determined that the Austrian tax administration’s undertakings to identify future rulings were sufficient to meet the minimum standard except that it was not certain that information on all potential exchange jurisdictions were able to be identified in all cases. The Austrian tax administration was recommended to continue with its plan to ensure information on all potential exchange jurisdictions is obtained as part of the ruling process.

81.  Internal ministerial guidance1 was issued in late 2016, making the process of gathering information on all potential exchange jurisdictions mandatory for all Austrian tax offices. The guidance refers explicitly to information required by the template of Annex C of the 2015 Action 5 Report (OECD, 2015) including the details of the entities in recipient jurisdiction. Accordingly, during the year in review, the local tax office and Large Taxpayer Audit Units already carried out the information gathering process on all potential exchange jurisdictions using information in the taxpayer file and other databases. Austria reports that in all cases, information on all potential exchange jurisdictions was identified.

Review and supervision mechanism (ToR I.4.3)

82.  In the prior year peer review report, it was determined that the Austrian tax administration’s review and supervision mechanism was sufficient to meet the minimum standard. In addition, Austria carried out a review process, as a result of which the errors in respect of four past rulings were identified. This review process involved checking every case on the basis of its content and confirmed that the identification of all rulings was otherwise undertaken accurately. The Austrian tax administration’s implementation meets the minimum standard.

Conclusion on section A

83.  For the year in review, Austria strengthened its internal guidance and improved its review process, as explained above, and therefore Austria has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

84.  Austria has the necessary domestic legal basis to exchange information spontaneously. Austria notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

85.  Austria is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”), (ii) double tax agreements in force with 70 jurisdictions and (iii) tax information exchange agreements with seven jurisdictions.2

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

86.  In the prior year peer review report, it was noted that the Austrian tax administration’s completion and exchange of templates were sufficient to meet the minimum standard except for the timely exchange of information on past and future rulings (ToR II.5.6). With respect to the completion of the summary section of the template, Austria confirms that it uses the suggested FHTP internal guidance.

87.  For the year in review, the timeliness of exchanges is as follows:

 

Past rulings in the scope of the transparency framework	Number of exchanges transmitted by 31 December 2017	Delayed exchanges
		Number of exchanges not transmitted by 31 December 2017	Reasons for the delays	Any other comments
	23	36	See below	This includes past rulings that needed to be exchanged with new members of the IF that joined in 2017
Future rulings in the scope of the transparency framework	Number of exchanges transmitted within three months of the information becoming available to the competent authority or immediately after legal impediments have been lifted	Delayed exchanges
		Number of exchanges transmitted later than three months of the information on rulings becoming available to the competent authority	Reasons for the delays	Any other comments
	0	23	See below	This includes exchanges on 13 future rulings issued in 2016 and all 23 were exchanged in 2018.
Total	23	59

 

Follow up requests received for exchange of the ruling	Number	Average time to provide response	Number of requests not answered
	0	0	N/A

88.  Austria provided the following explanation for the transmission delay regarding past and future rulings during 2017. Austria experienced some issues in relation to a technical incompatibility between the European Commission IT module and the domestic Austrian IT systems. These problems were continuing from 2016, as a result of which the prior year peer review report noted that no exchanges of information on past and future rulings occurred in 2016 and made a recommendation to continue efforts to remedy the issue.

89.  The technical issues were resolved in late 2017. Austria notes that once the European Commission’s transmission tool was received, the local tax offices and large taxpayers unit was informed and provided with training at the end of November 2017. In December 2017, Austria was able to initiate the exchange process. Due to the time constraints, the Austrian tax administration was not able to transmit all rulings in 2017. The remaining rulings were transmitted in 2018.

Conclusion on section B

90.  Austria has the necessary legal basis for spontaneous exchange of information, a process for completing the templates in a timely way. In respect of both past and future rulings, Austria did not complete any exchanges until late 2017 and early 2018. This includes information on rulings that were otherwise due to be exchanged in 2016. Austria has met all of the ToR except for the timely exchange of information on past and future rulings (ToR II.5.6). Austria is recommended to ensure that all information on past and future rulings is exchanged as soon as possible.

C. Statistics (ToR IV)

91.  The statistics for the year in review are as follows:

 

Category of ruling	Number of exchanges	Jurisdictions exchanged with
Rulings related to preferential regimes	N/A	N/A
Cross-border unilateral advance pricing arrangement (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles	23	Germany, Bulgaria, Singapore, Brazil, Russia, Netherlands, Belgium, Ireland, Italy, Korea, Malta, Switzerland
Cross-border rulings providing for a unilateral downward adjustment to the taxpayer’s taxable profits that is not directly reflected in the taxpayer’s financial / commercial accounts	N/A	N/A
Permanent establishment rulings	N/A	N/A
Related party conduit rulings	N/A	N/A
De minimis rule	N/A	N/A
IP regimes: total exchanges on taxpayers benefitting from the third category of IP assets, new entrants benefitting from grandfathered IP regimes; and taxpayers making use of the option to treat the nexus ratio as a rebuttable presumption	N/A	N/A
Total	23

D. Matters related to intellectual property regimes (ToR I.4.1.3)

92.  Austria does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
Austria encountered delays in the timely exchange of information on past and future rulings. This is a continuing recommendation from the prior year peer review.	Austria is recommended to ensure that all information on past and future rulings is exchanged as soon as possible.

Jurisdiction’s response and recent developments

93.  Austria has taken steps to remedy the above recommendation and confirms that the remaining rulings not transmitted in 2017 were transmitted in 2018.

References

OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1.  BMF-280000/0214-IV/2/2016 and BMF-010221/0708-VI/8/2016.

← 2.  Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Austria also has bilateral agreements in force with Algeria, Armenia, Bahamas, Bahrain, Belarus, Bosnia and Herzegovina, Brunei Darussalam, Burkina Faso, Dominican Republic, Egypt, El Salvador, Former Yugoslav Republic of Macedonia, Gabon, Guatemala, Hong Kong (China), Jamaica, Kenya, Kuwait, Montenegro, Morocco, Peru, Philippines, Qatar, Serbia, Chinese Taipei, Tajikistan, Thailand, Turkey, Turkmenistan, United Arab Emirates, United States, Venezuela and Viet Nam.