BEPS - Austria. Claus Staringer IFA Austrian Branch

Transkript

1 BEPS - Austria Claus Staringer IFA Austrian Branch Institut für Österreichisches und Internationales Steuerrecht 1

2 The BEPS Initiative [Overview] Nature of the BEPS initiative Project of International Organisation(s), in particular OECD Aim: not only further development of the OECD Model Convention, but also recommendations for international standards (i.e. soft harmonisation ) of domestic tax laws International standards, even if not legally binding, will implicitly request general acceptance and implementation throughout OECD Member States Institut für Österreichisches und Internationales Steuerrecht 2

3 The BEPS landscape in Austria Only limited public debate Expert debate will certainly pick up on OECD discussion drafts Government position BEPS not explicitly mentioned in December 2013 government program, but clearly targeted ( fight against tax fraud and tax avoidance, tax havens, offshore structures ) But is Austria BEPS-prepared? Do BEPS actions fit into Austrian tax policy? risk of one size fits all approach Institut für Österreichisches und Internationales Steuerrecht 3

4 Action 1: Address Tax Challenges of Digital Economy [ No Google in Austria ] Institut für Österreichisches und Internationales Steuerrecht 4

5 Action 2: Neutralise Effects of Hybrid Mismatches Pool of various double non-taxation issues OECD discussion draft on treaty issues published 19 March 2014, on domestic issues to come Examples undue access to treaty benefits longstanding abuse of law doctrine exists in Austria, even for tax treaties no deduction without taxable receipt correspondence principle unknown in Austria (not even in the recent AbgÄG 2014) 162 BAO (recipient disclosure requirement) is no good example no deduction if double dip would make deduction in Austria depending on foreign law Institut für Österreichisches und Internationales Steuerrecht 5

6 Action 3: Strengthen CFC Legislation Introduction / strengthening of domestic CFC legislation Austria: policy decision against look through CFC legislation (for over 20 years now) instead: deferred taxation for foreign passive/low taxed income until repatriation by dividend ( 10 Abs 4 KStG) extreme cases were seen as abuse of law (Dublin Docks cases) is there really a need for policy change? Institut für Österreichisches und Internationales Steuerrecht 6

7 Action 4: Limit Base Erosion (Interest and Royalty Payments) Austria as a BEPS frontrunner AbgÄG 2014: No deduction for interest and royalty payments if paid to related payee company who is low taxed full exemption nominal tax rate <10% effective tax rate <10% due to a specific tax shelter regime no bona fide clause or rebuttal option Almost no policy debate on pro/cons What if OECD standard will be different? Institut für Österreichisches und Internationales Steuerrecht 7

8 Action 5: Counter Harmful Tax Practices not easy to find in Austria no preferential regimes no ring-fencing Background Existing work of OECD and EU (Code of Conduct etc.) EU State Aid rules strong preventive effect Limited appetite to engage in tax competition Institut für Österreichisches und Internationales Steuerrecht 8

9 Action 6: Prevent Tax Treaty Abuse OECD discussion draft published 14 March 2014 Limitation on Benefits Clauses based on US LoB so far not part of Austria s treaty policy Anti Treaty Shopping Clause (GAAR) in Tax Treaties one of the main purposes test not in accordance with object and purpose of the treaty not needed under Austrian abuse of law doctrine separate treaty GAAR would create significant uncertainty Institut für Österreichisches und Internationales Steuerrecht 9

10 Action 6: Prevent Tax Treaty Abuse (2) Other examples Split-up of contracts for PE period purposes (SAAR) Minimum holding period for dividend WHT relief Capital gains from real estate companies (Art 13 para 4 OECD MC to be expanded) Low tax third country PEs (eg PE sandwich structures) Tie breaker for dual resident companies Institut für Österreichisches und Internationales Steuerrecht 10

11 Action 6: Prevent Tax Treaty Abuse (3) Help for Interpretation Treaties should not facilitate tax avoidance, so treaties must not be interpreted to protect against e.g. thin cap legislation (Art 24), no-cross border consolidation rules (Art 24), CFC legislation (Art 7 or 10), exit taxes (Art 13/5), dividend stripping rules (Art 13/5) Introduction of a US style saving clause treaty must not affect a state s right to tax its residents (if not explicitly mentioned for a specific treaty rule) New title and preamble to tax treaties Institut für Österreichisches und Internationales Steuerrecht 11

12 Action 7: Prevent artificial PE Avoidance PE definition should be updated to prevent abuse Examples Low risk distributor subsidiaries replace previous commissionaire arrangements (Note: Was commissionaire really a PE?) Fragmentation of MNE activities to use preparatory/auxiliary PE exceptions Institut für Österreichisches und Internationales Steuerrecht 12

13 Action 8 to 10: Bring transfer pricing in line with value creation [a topic in itself] Institut für Österreichisches und Internationales Steuerrecht 13

14 Action 11: Establish methodology to collect/analyse data on BEPS and actions to address it OECD: Improving the availability and analysis of data on BEPS is critical There is only limited empirical evidence on the damage created by BEPS only top of the iceberg? or a mountain out of a molehill (aus einer Mücke einen Elefanten gemacht)? Evidence of BEPS in Austria? does it exist? is it published for discussion? is Austria actually a BEPS winner? no shoot first - ask later please Institut für Österreichisches und Internationales Steuerrecht 14

15 Action 12: Require disclosure of aggressive tax planning to enable government to identify risk areas quickly BEPS structures would be very likely audited anyway, but years later real purpose of disclosure: enable quicker counterlegislation could fit into a system of permanent changes in tax legislation but for Austria? continuity/reliability/stability/planning security are a better policy fit even if seemingly less efficient Institut für Österreichisches und Internationales Steuerrecht 15

16 Action 13: Re-examine transfer pricing documentation [see above a topic in itself] Institut für Österreichisches und Internationales Steuerrecht 16

17 Action 14: Make dispute resolutions mechanisms more effective to ensure certainty and predictability for business improve MAP supplement MAP with mandatory and binding arbitration Austria: Not much appetite to include arbitration in tax treaties Institut für Österreichisches und Internationales Steuerrecht 17

18 Action 15: Develop a multilateral instrument the good old bilateral way would take long time to implement BEPS actions in actual tax treaties way to a swift implementation: multilateral instrument to amend bilateral tax treaties too early to assess the conceptual/legal issues of such multilateral approach immediate multiple override of bilateral treaties? Austrian research has delivered scientific groundwork for a multilateral tax treaty Institut für Österreichisches und Internationales Steuerrecht 18

19 Outlook the BEPS initiative is on its way but is Austria prepared for it? is there a well-founded policy need for BEPS actions (all or some of them)? this should be openly debated if yes: BEPS actions will be certainly accepted by the business community if no: BEPS actions will cause permanent trouble Institut für Österreichisches und Internationales Steuerrecht 19

20 INSTITUT FÜR ÖSTERREICHISCHES UND INTERNATIONALES STEUERRECHT Welthandelsplatz 1, Gebäude D3, 1020 Wien Österreich UNIV.PROF. DR. CLAUS STARINGER T claus.staringer@wu.ac.at Institut für Österreichisches und Internationales Steuerrecht 20