The Federal Tax Court
held that interest expenses incurred in connection with the
acquisition of an affiliated company within a tax group are not
tax-deductible. This decision contradicts a former decision of said
Under Austrian tax law, no deduction is possible for interest in
connection with debt arising from the acquisition of shares that
were, directly or indirectly, purchased from a group company or
from a controlling shareholder. The question whether this
prohibition also applies in case of acquisitions within a tax group
(Unternehmensgruppe) is contentious. Pursuant to sec. 9 of the
Austrian Corporate Income Tax Act (Köperschaftsteuergesetz ),
affiliated companies may form a tax group by jointly filing a group
taxation application with the tax authorities, resulting in 100% of
the taxable income of each member of the group being attributed to
the top-tier company in the tax group.
In a decision of 2015 (22 October 2015, RV/4100145/2012) the
Federal Tax Court ruled that interest expenses are, in principle,
tax-deductible as there is an economic link between interest
expenses for the acquisition of a company that are borne by the
toptier company and income of the top-tier company. This follows
from the fact that the income of the acquired company, as a group
member, is attributed to the group parent.
However, in a comparable case the Federal Tax Court recently
denied the interest deduction. In its decision (10 June 2016,
RV/7102088/2013), the court had to deal with an intra-group loan
provided by a group member to its top-tier company for financing
the acquisition of two target companies. The tax office and
subsequently the Federal Tax Court denied the deduction of the
interest paid by the top-tier company even though the taxpayer had
referred to the decision cited above. As a result, by not allowing
the deduction of the interest paid by the top-tier company and by
taxing the interest income of the group member that is to be
attributed to the top-tier company, double taxation occurred. An
appeal against this decision is pending.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The personal representatives, who are responsible for administering the estate of someone who has died, generally require a Grant of Representation to allow them to collect in, sell and distribute the deceased's assets.
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”
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).