Austria: Tightening Of Exit Taxation

The draft for the Tax Amendment Act 2015 published today [19 October 2015] proposes an amendment of existing exit taxation rules that would significantly tighten these rules, which eventually lead to the taxation of hidden reserves in assets transferred.

Current law

Currently, Austrian tax law provides for the exit taxation of hidden reserves embedded in assets in case Austria's taxation right with respect to these assets is restricted or lost, eg on the occasion of the taxpayer's moving outside of Austria, a transfer of an entire business or specific assets outside of Austria, or any other circumstances leading to the loss of such domestic taxation right. Nevertheless, in case Austria's taxation right is lost or restricted vis-à-vis an EC or EEA member state with comprehensive administrative and enforcement assistance, the taxpayer is entitled to opt for a tax deferral. If such option is exercised, the amount of hidden reserves in the assets transferred will be determined by way of a decree issued by the competent tax authority upon the time of the assets' transfer. However, the obligation to pay the amount of tax due on such hidden reserves is postponed until a realization event (eg sale, transfer outside the EC/EEA, etc) with respect to the assets transferred occurs. If such realization event occurs after the expiry of the obligatory statute of limitation of ten years, the taxpayer will not be obliged to pay the amount of tax due.

These rules apply irrespective of whether the assets transferred are part of the taxpayer's business assets or their private assets (with respect to the latter, restricted to financial assets). A special rule currently exists for self-developed intangibles transferred outside of Austria in order to avoid a double dip of expenses.

Proposed new rule

In light of the ECJ jurisprudence, the Austrian legislator now aims to significantly tighten the country's exit taxation rules by replacing the existing tax deferral concept with an instalment regime.

Under the proposed new regime, the option for a tax deferral will be replaced by an option to apply for the payment of instalments in case of business assets transferred from Austria to an EC or EEA member state with comprehensive administrative and enforcement proceedings. The criteria pursuant to which such option will be available remain the same (eg transfer to another business of the same taxpayer, transfer of an entire business, etc). With regard to assets that are part of the business' fixed assets, the instalment period amounts to seven years, while it is two years for current assets. In case a realization event (eg sale, transfer outside of EC/EEA member states, etc) with respect to the assets transferred takes place for which the option for payment in instalments has been exercised, the entire outstanding amount of tax will become due. The taxpayer will be obliged to notify the competent Austrian tax authority of such realization event within three months.

In case of the transfer of financial assets which are part of the non-business assets of an individual taxpayer, the current deferral concept will remain applicable; however, these will be restricted only to the actual move of an individual person outside of Austria, as well as the cost-free transfer of financial assets (eg by way of a gift or a transfer mortis causa) to another individual. In all other scenarios where Austria's taxation right with respect to the financial assets is restricted or lost vis-à-vis an EC or EEA member state with comprehensive administrative and enforcement assistance, only the payment of the amount of Austrian income tax due on the hidden reserves in instalments over a period of seven years is feasible.

In order to avoid any potential bypassing of these new rules, the instalment concept is equivalently also proposed to apply to the transfer of assets in the course of reorganisations governed by the Austrian Reorganisation Tax Act, with a seven years instalment period generally being applicable.


The proposed new rules are expected to enter into force as of 1 January 2016. The proposed changes for the transfer of assets occurring in the course of a reorganisation governed by the Austrian Reorganisation Tax Act shall apply to reorganisations resolved on or concluded by way of agreement after 31 December 2015. Any transfer of assets prior to these dates will therefore still be available for application of the deferral concept. In order to avoid the application of the new regime, rapid steps prior to year's end are recommended.

Statute of limitation

As noted above, in case of the application of the tax deferral concept, no income tax on hidden reserves on assets transferred outside of Austria will have to be paid in case a realization event occurs after expiry of the ten years statute of limitation. In order to avoid such scenario, the legislator has now proposed amending the wording of the ten years statute of limitation rule in such a way as to ensure that the ten years statute of limitation period only starts at that point in time in which the realization event actually occurs. Therefore, under the proposed new rule, even if the realization event occurs after ten years from the underlying asset's transfer outside of Austria, the taxpayer will still be obliged to pay the amount of Austrian income tax on the hidden reserve as determined upon the asset's transfer.

Such amendment shall enter into force as of 1 January 2016 and shall also capture scenarios for which the deferral concept was applied in the past (eg covering any transfer of assets occurring after 31 December 2005).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions