BEPS brings massive changes for international businesses

After only about 2 years, the OECD the BEPS project (BEPS stands for Base Erosion and Profit Shifting(for now) Completed. Under the leadership of the OECD, the G20 countries as well as many other countries from Asia, Africa and South America had set themselves the goal of, Weaknesses and far-reaching Tax loopholes or to eliminate or at least limit the scope of discretion in international tax law. In this sense, 15 action points defines which ones fall into three groups It is possible to distinguish between coherence, substance, and transparency. Furthermore, there are the action points „Digital Economy“ and also „Multilateral Instruments“, which take on a kind of special role.

In the category Consistency For example, the focal points regarding Hybrid instruments, CFC Rules, (restrictions) on interest deduction or also „Measures against harmful tax arrangements“. These action points aim to Limitation of design options and may lead to the fact that in the future, tax models that have been accepted in the past will no longer be tolerated by the tax authorities. The Austrian financial authorities have long been aware of this here even before the finalization of the BEPS project. Action required identified and, for example, the fiscal Participating income exemption of profit shares (in the case of hybrid financings) refuses, If they have incurred tax-deductible business expenses abroad. In a similar vein, the situation is similar with the tax deductibility of interest and license payments within the group. Austrian companies can therefore not claim interest and license payments to foreign group companies as operating expenses, provided that the foreign entity has not paid any withholding tax on the payments. Receiving company not one Taxation interest or license income with at least 10% This prerequisite is not only lacking when, for example, the (corporate) tax rate of the recipient company is absolutely below 10%, but also when, due to local benefits, effective taxation of interest or license revenues with less than 10% occurs.

Changes to business premises exceptions

A basic principle International double taxation agreements states that corporate profits are taxed in the company's country of residence, unless another state has a different tax regime. Place of operation is present. A place of business is generally established by a fixed local establishment, by a representative, or by a construction or installation process. No operating location However, this only applies if the company has only one Part-time work exercises because, for example, a positionr is present and the company's business activities are not carried out through this location (where there is only one warehouse).

In the BEPS project and especially in the „Avoiding the status of a place of business“The OECD has also addressed the question of whether the requirements for establishing and for excluding business entities still apply. timely and are appropriate for today's business models. Likewise, the question was raised during the action point Digital Economy in the room, if not a separate operating site crime This idea was created for e-commerce or digital economy matters, etc. However, in the end, this idea was not implemented. Future amendment of the exemption catalogue However, in terms of operating sites, it is designed in such a way that the Helpful character the respective activity specifically proven must be done and not already generally and in a kind of automatic way Special provision in the case of certain (supportive) activities of an establishment Granted can become.

BEPS and group transfer pricing

The topic of Reconciliation prices It was also intensively discussed as part of the BEPS project further developed, The OECD has also built on its own previous work.

In addition to the ambitious goal, Calculation price aspects of intangible economic assets reorder and align the related profit potential in line with the Value chain To bring about this, the countries involved in the project, or their financial administrations, have agreed to Remittance price documentation requirements companies operating across borders extend and to change. This means not only that the distribution of the content to be documented (e.g. value chain or adequacy documentation) is divided between„Master file“And „Countryfile (Local File)“ will be partially postponed, but also that with the so-called „Country by Country Reporting“ at least one additional Documentation effort threatens. Although Country by Country Reporting is only relevant for very large corporations (only for an annual consolidated group turnover of at least 750 million. €And since this only affects a few companies in Austria per se, it cannot be ruled out that Austrian companies will have to pass on certain data to the parent company within the group, and that these data will then be aggregated and included in the Country by Country Reporting.

The data collected through Country by Country Reporting Data – it is mainly about per country (i.e., the sum of the units of a group operating in a specific country) aggregated Data such as, for example. Sales revenue, Number of employees, Tax burden etc. – should be between the Financial administrations the relevant countries automatic Exchanged will. Although the OECD claims that alone from the ones through the County by Country Reporting won Information by the financial administrations Not It must be concluded that the accounting prices of a corporation are not foreign, but there still remains a negative tinge and a certain amount of uncertainty for the taxpayer. Uncertainty This is based on what the financial management departments could use this additional information for.

Outlook

The extensive changes brought about by the OECD’s BEPS project will also lead to the fact that in Austria in the near future Explicitly mandatory transfer pricing documentation requirements to be introduced. Further concrete legitimate Transfers into Austrian law It remains to be seen.

In addition, some of the 15 action points in total are still to be further developed by the OECD, and the measures resulting from the BEPS project and Findings in the year 2020 an extensive Review to undergo.