The Legal 500

The finance ministers of the European Union met again last week to discuss the plan of introducing a single EU financial transaction tax. According to the plan, a 0.1 percent tax would be levied on bond and capital transactions, while a 0.01 percent tax would be charged on derivatives transactions.

The OECD has been active in elaborating substantive principles as to how tax conflicts arising because of the increasingly complex world economy and the increasingly complicated national tax systems can be lessened

As a result of a ruling of the European Court last July, the previous limitation of the VAT law, providing that companies could not claim back part of the positive difference between the payable and deductible VAT which related to their unpaid acquisitions, was annulled.

SIMPLIFICATION AND TIGHTENING UP - THE TAX AUTHORITY MIGHT IMPOSE PENALTIES AS HIGH AS 4 MILLION FORINTS  

The question of transfer prices is getting increased emphasis both in Hungary and internationally as more than 60% of world trade transactions are made up of inter-company group deals.

From 1 January 2012, the transfer of a construction right will be VAT exempt only until the construction permit is issued. The previous regime had allowed the exemption until the completion of the rough construction.

Inbound dividends from low-tax jurisdictions may not be exempt from Austrian corporate income tax under the Austrian international participation exemption but may be subject to a switch-over to the credit method. In the past, such profits could be repatriated by way of a tax neutral import merger instead. However, a recent amendment to the Austrian Reorganisation Tax Act may lead to a fictitious distribution in such cases.

ON 7 MAY 2010, AUSTRIA AND SERBIAsigned a double taxation agreement (DTA)with an additional protocol concerningcertain articles of the DTA (business profi ts,interest and exchange of information).  

AN IMPROVEMENT IN THE LIQUIDITY OFbanks, as well as the need for an additionalinjection of money, became crucial forUkrainian banks in the aftermath of therecent global fi nancial crisis. An Increase inthe number of non-performing loans (NPLs)negatively impacted the overall liquidityof Ukrainian banks by forcing them to holdmandatory reserves.1 

Since September 9, 2009 a new law is in force in Austria that allows for a wider exchange of information than before if a double tax treaty, an ECDirective or international agreements provide for it. Since September 18, 2009 Austria is no longer on the OECD's Grey List of countries that are considered to not fully implement OECD tax standards.

Austrian corporations have been allowed to integrate non-Austrian corporations into an Austrian tax consolidation group since 2005. This opportunity has proven to be an effective tool in achieving a crossborder use of losses between separate corporate entities and is widely used by internationally active groups with operations in Austria.