Worldwide transfer pricing reference guide 2014

Austria (continued)
Documentation requirements
The Austrian Transfer Pricing Guidelines clearly state that there is an obligation to prepare transfer pricing documentation based on
the Federal Fiscal Code’s (FTC’s) general provisions concerning bookkeeping, record-keeping and the disclosure requirement for tax
purposes. Regarding the content and scope, documentation must be in line with the documentation requirements according to the OECD
Guidelines (in particular, according to Chapters V, VIII and IX). It is also permissible to prepare documentation that follows the Code of
Conduct on Transfer Pricing Documentation for Associated Enterprises in the European Union (EU). According to a published opinion of
the MF, the country-specific transfer pricing documentation prepared in accordance with the EU Code of Conduct has to be prepared in
the official Austrian constitutional language, which is German.
Documentation deadlines
According to a published opinion of the MF, transfer pricing documentation must be available at the time the tax returns are filed.
Therefore, documentation should be prepared contemporaneously and must be provided to the tax authorities upon request
(which is usually during a tax audit). Usually, the tax auditor will determine a submission deadline, which can vary greatly from case to
case (e.g., from only one week to several weeks). Upon the tax auditor’s consent, an extension of the deadline is possible. Given a clear
statement contained in the Austrian Transfer Pricing Guidelines regarding the requirement to prepare transfer pricing documentation,
short submission deadlines will likely become the norm in the future.
Statute of limitations on transfer pricing assessments
The statute of limitations on a transfer pricing adjustment is usually six years after the end of the calendar year in which the relevant
fiscal year ends. The term may be extended up to 10 years.
Return disclosures/related party disclosures
No specific continuous disclosure is required in the annual tax return. In case of a tax audit, the auditors usually ask for a description
of major related party transactions, as well as for disclosure of all contracts in place with related parties and transfer pricing studies
available. In an increasing number of cases, an extensive transfer pricing questionnaire is discussed.
Transfer pricing-specific returns
No transfer pricing-specific returns have to be filed along with the annual tax returns.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
Tax authorities regularly examine related party transactions and transfer prices charged. There is a clear trend towards increased
awareness of transfer pricing problems among tax auditors.
In general, the likelihood of an annual tax audit (i.e., every fiscal year being examined) is high. The likelihood that transfer pricing will be
reviewed as part of that audit is also high. The likelihood that the transfer pricing methodology will be challenged can be characterized as
medium to high, depending on the specific circumstances of the case.
APA opportunity
Based on Section 118 FTC, it is possible to apply for a unilateral, binding and appealable advance ruling issued by competent tax office
on the tax treatment of a particular (but yet to occur) transfer pricing issue. The fee for such a unilateral APA amounts to EUR20,000.
Under specific circumstances, it is possible to ask the Austrian tax authorities to participate in negotiations of a bilateral APA on the basis
of Article 25(3) of the respective double tax treaty.
Expected reaction to OECD Report on BEPS
As a first step, on 9 January 2014, the MF published the 2014 Tax Amendment Act (Abgabenänderungsgesetz 2014; AbgÄG 2014), a
draft bill for amendments to Austrian Tax Acts. Amongst other changes, it is planned that royalty and interest payments to domestic and
foreign affiliated corporations shall no longer be tax deductible if the income of the recipient corporation is completely or predominantly
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