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Austria

CMS Expert Guide to Transfer Pricing Documentation in Austria

Table of contents
  1. Are taxpayers obliged to maintain transfer pricing (“TP”) documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
  2. What is the content of the documentation that must be prepared?
    1. Which transactions must be documented – all transactions with associated enterprises, or only those which exceed a particular threshold?
    2. What is the definition of “associated enterprises” for the purposes of this requirement – in particular, are transactions between a permanent establishment (PE) and its head office in the scope of the documentation requirement?
    3. For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on TP documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?
    4. For all countries (and, in particular, OECD countries), is the content of the documentation similar to that described in the revisions to Chapter V of the OECD TP Guidelines (final report on Action 13 of the BEPS project)? If not, are taxpayers entitled to choose between the local requirements and the OECD approach?
    5. Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require a taxpayer in your jurisdiction to provide information which is located in another state?
    6. If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
    7. If comparable studies are to be provided in general, are safe harbours/specific circumstances exempting taxpayers from preparing benchmark studies (such as the EU Joint Transfer Pricing Forum Guidelines on low value-adding services or revisions to Chapter VII of the OECD TP Guidelines about low value-adding intragroup services) in your jurisdiction, or are there situations in which tax authorities do not request benchmark studies? If so, in which circumstances are taxpayers exempted from benchmark studies?
    8. What language(s) is to be used by taxpayers in submitting the TP documentation?
  3. What is the deadline or timescale for providing TP documentation to the tax authorities – is it to be provided, for example, upon filing of the tax returns, at the beginning of a tax audit or on the specific request of the tax authorities?
  4.  In the event that the documentation is not provided within the applicable timescale or is incomplete, do documentation-related penalties apply? If so, please detail the penalties and the circumstances in which they do and do not apply.
  5. Does the absence or incompleteness of documentation reverse the burden of proof as regards the arm’s length character of the transactions?
  6.  In the event that the tax authorities (i) impose documentation-related penalties and (ii) make a TP reassessment, does the imposition of documentation-related penalties prevent the taxpayer from initiating any Mutual Agreement Procedure (“MAP”) which may be contained in an applicable tax treaty (or, for EU countries, the procedure contained in the EU Arbitration Convention) with a view to eliminating any double taxation resulting from the TP reassessment?
  7. Any other relevant aspect not addressed above?
  8.  Did your country implement the obligation to file a CbCR? If not, is the introduction of the CbCR in your jurisdiction contemplated and, if so, when?
  9. If the obligation to file a CbCR is in force, what is the tax year from which this obligation applies and what is the deadline for filing the CbCR?
  10.  Which taxpayers have to file a CbCR?
  11. Is the content of the CbCR fully in line with the OECD model (final report on Action 13 of the BEPS project)? If not, what are the differences?
  12. What is the penalty for failing to file the CbCR on time? Can local subsidiaries of a foreign group suffer the local penalty if the foreign group has not filed the CbCR?
  13. Are there tax treaties in force in your jurisdiction allowing the communication of CbCR with other jurisdictions?
  14.  Any other relevant aspect not addressed above?
  15. Are there any other documentation/filing requirements in relation to TP?
  16. If so, what is the content of such documentation/filing requirement? What language(s) is to be used by taxpayers?
  17. What is the deadline for meeting this documentation/filing requirement?
  18. Does this obligation apply to all taxpayers or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
  19.  What is the penalty for failing to meet this requirement on time?
  20. Any other relevant aspect not addressed above?
Austria

A. Transfer pricing documentation requirements

1. Are taxpayers obliged to maintain transfer pricing (“TP”) documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

In Austria, taxpayers are required to maintain TP documentation if they fall within the scope of the Transfer Pricing Documentation Act (Verrechnungspreisdokumentationsgesetz, “VPDG”). This obligation specifically applies to Austrian entities that are part of a multinational enterprise (“MNE”) group. 1 Section 2 no 1 and 2 VPDG.  The law mandates a three-tiered documentation approach including a Master File, Local File and Country-by-Country Report (“CbCR”).

The requirement to prepare a Master File and Local File generally applies if the Austrian entity’s turnover exceeded EUR 50 million in each of the 2 preceding financial years. 2 Section 3 para 1 VPDG.  A CbCR must be prepared if the group’s consolidated turnover in the previous financial year was at least EUR 750 million. 3 Section 3 para 2 VPDG.

For entities that do not meet these thresholds, the general documentation requirements as outlined in the Austrian Federal Fiscal Code (Bundesabgabenordnung, “BAO”) still apply. This means that the taxpayer does not need to follow the three-tiered approach to TP documentation as set forth in Chapter V of the OECD TP Guidelines, but can do so voluntarily. In any case, depending on the volume and complexity of cross-border intragroup transactions, TP documentation needs to include a minimum of information on the related parties/MNE group, relevant transactions, value chain within the group, choice of TP method and (written) contracts.

2.What is the content of the documentation that must be prepared?

2.1 Which transactions must be documented – all transactions with associated enterprises, or only those which exceed a particular threshold?

All transactions with associated enterprises must be documented. This includes cross-border transactions between related parties such as the sale of goods, provision of services, financing and the use of intangible assets. For Austrian entities that are part of an MNE group, documentation requirements apply when thresholds are exceeded. Entities that do not exceed these thresholds are not required to adhere to the detailed structure outlined in the VPDG and VPDG-DV (Master File, Local File and CbCR).

However, entities below the threshold need to align their documentation according to the Austrian Federal Fiscal Code. The extent and structure of the documentation is less stringent than for those that meet the thresholds, but the Austrian tax authorities still expect that prices are set in accordance with the arm’s length principle and that sufficient evidence is provided to support this.

2.2 What is the definition of “associated enterprises” for the purposes of this requirement – in particular, are transactions between a permanent establishment (PE) and its head office in the scope of the documentation requirement?

“Associated enterprises” according to Section 2 para 2 VPDG means any of the following:

  • an independent entity of an MNE group that is included in the consolidated financial statements of the MNE group for financial reporting purposes, or would be included if equity interests in that business unit of an MNE group were traded on a public securities exchange
  • an independent entity that is not included in the consolidated financial statements of the MNE group solely because of its size or for reasons of materiality
  • a PE of an independent entity of an MNE group falling within the listed above, provided that the entity prepares separate financial statements for that PE for accounting, regulatory, tax or internal management purposes.

Under this definition, transactions between a PE and its head office are generally within the scope of the documentation requirement, as they are considered transactions between associated enterprises. 4 Bonner, Verrechnungspreise – rechtliche Grundlagen / Rechtsquellen (version dated 09.8.2023, Lexis Briefings in lexis360.at).

2.3 For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on TP documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?

In Austria, the content of TP documentation is generally aligned with the requirements outlined in the EU TPD. If the TP documentation of an MNE is based on the EU TPD, the Austrian tax authorities must recognise it as the core documentation for assessing the transfer prices of the MNE group in Austria. At the same time, it does not relieve the taxpayer of the obligation to provide further information and documents in addition to the EU TPD during an external audit or otherwise upon request by the Austrian tax authority. 5 Austrian Transfer Pricing Guidelines (VPR) Mn 413.  Therefore, taxpayers cannot choose.

2.4 For all countries (and, in particular, OECD countries), is the content of the documentation similar to that described in the revisions to Chapter V of the OECD TP Guidelines (final report on Action 13 of the BEPS project)? If not, are taxpayers entitled to choose between the local requirements and the OECD approach?

The VPDG aligns with the OECD’s BEPS project recommendations, specifically the three-tiered approach from Action 13. If thresholds are not met, the general rules under the BAO apply and the taxpayer is not required to follow the OECD’s three-tiered documentation approach, but may do so voluntarily.

2.5 Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require a taxpayer in your jurisdiction to provide information which is located in another state?

Yes, taxpayers not established in Austria are required to provide specific information upon request if it concerns an Austrian tax liability. The Austrian tax authorities can also require taxpayers within their jurisdiction to provide information that is located in another state if it is relevant to determining their tax obligations in Austria. 6 Lang/Mneszut, Erhöhte Mitwirkungspflichten (version dated 20.2.2024, Lexis Briefings in lexis360.at).

According to Section 115 BAO, the tax authorities are required to investigate cases subject to Austrian tax and to determine ex officio the factual and legal circumstances relevant to the tax liability and the collection of the tax. This obligation of the tax authority is limited by an increased duty of cooperation on the part of the taxpayer in the case of foreign matters. 7 Section 115 para 1 BAO.

2.6 If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?

Tax authorities regularly scrutinise pan-regional database studies, 8 Hoffmann/ Buschmann, Pan-regionale Datenbankanalysen, TPI 2021, 213.  but due to the lack of sufficient Austrian comparable companies in databases, it is often not possible to identify enough local Austrian peer companies, which is why they are regularly accepted.

2.7 If comparable studies are to be provided in general, are safe harbours/specific circumstances exempting taxpayers from preparing benchmark studies (such as the EU Joint Transfer Pricing Forum Guidelines on low value-adding services or revisions to Chapter VII of the OECD TP Guidelines about low value-adding intragroup services) in your jurisdiction, or are there situations in which tax authorities do not request benchmark studies? If so, in which circumstances are taxpayers exempted from benchmark studies?

Austria has adopted the low value-adding intragroup services approach in the Austrian TP Guidelines without any thresholds. 9 Austrian Transfer Pricing Guidelines (VPR) Mn 94 et seq.  Based on this, a safe harbour of a 5% cost-plus mark-up can be applied for low value-adding intragroup services, generally covering support services that are not part of the core business of the group, do not create or use unique and valuable intangible assets, and do not relate to the management or control of economically significant risks. The list of typical activities that may and may not constitute low value-adding intragroup services, as well as the specific documentation requirements, reflect the relevant provisions of the OECD.

2.8 What language(s) is to be used by taxpayers in submitting the TP documentation?

The Master File, Local File and CbCR must be submitted in either an official language permitted in tax proceedings or in English. However, Section 3 of the CbCR must be provided in English. 10 Section 11 Verrechnungspreisdokumentationsgesetz-Durchführungsverordnung (VPDG-DV).

Therefore Master Files, Local Files and CbCRs written in English, as well as contracts on intragroup service relationships attached to the documentation, do not have to be translated into German. This is an exception to the general rule in the Austrian Federal Fiscal Code that all books and records must be translated into German at the request of the tax authorities. 11 Austrian Transfer Pricing Guidelines (VPR) Mn 431.

TP documentation not related to the VPDG and VPDG-DV may be kept in any living language. However, if not in German, the tax authority may request a translation, certified if necessary. If the documentation is in English, a German translation is only required if specifically needed during the investigation. 12 Austrian Transfer Pricing Guidelines (VPR) Mn 414.

3. What is the deadline or timescale for providing TP documentation to the tax authorities – is it to be provided, for example, upon filing of the tax returns, at the beginning of a tax audit or on the specific request of the tax authorities?

The Master File and Local File must be submitted within 30 days upon request by the tax authorities after filing the tax return. The CbCR must be submitted within 12 months following the end of the fiscal year.  13 Austrian Transfer Pricing Guidelines (VPR) Mn 407; Bonner, Verrechnungspreise – Dokumentationserfordernisse (version dated 08.8.2023, Lexis Briefings in lexis360.at).

The general documentation requirements for the Austrian tax authorities are that the requirements must be met in a timely manner, i.e. the documentation must generally be prepared at the time of the transaction or, in any event, no later than the time when the tax return for the tax year in which the transaction took place is prepared and filed. 14 Austrian Transfer Pricing Guidelines (VPR) Mn 407; Bonner, Verrechnungspreise – Dokumentationserfordernisse (version dated 08.8.2023, Lexis Briefings in lexis360.at).

The Master File and Local File, or any other TP documentation, are considered part of a taxpayer’s records that must be maintained for tax purposes, as required by Section 124 BAO. A violation of this record-keeping requirement can lead to prosecution under Section 51 of the Austrian Financial Criminal Code (Finanzstrafgesetz, “FinStrG”), with a penalty of up to EUR 5,000.

Failure to submit the CbCR on time, or incomplete submission, can result in fines of up to EUR 50,000 for intentional non-compliance or EUR 25,000 for gross negligence according to Section 49b FinStrG.

In case of TP adjustments, interest may be imposed on late payment of additional corporate tax liabilities caused by a TP assessment. The interest rate is 2% plus the base rate. Late payment of corporate income tax is assessed on the outstanding balance, calculated as the positive difference between the corporate income tax return and tax payments during the tax year, minus any down payments.

5. Does the absence or incompleteness of documentation reverse the burden of proof as regards the arm’s length character of the transactions?

In Austria, if TP documentation is provided that complies with the record-keeping requirements of the Austrian Federal Fiscal Code and the relevant TP standards, it is presumed to be properly maintained. In such cases, the documentation serves as the basis for tax assessment, and the burden of proof shifts to the tax authority to demonstrate that the transfer prices do not conform to the arm’s length principle. 15 Austrian Transfer Pricing Guidelines (VPR) 2021, para 409; EAS 604.

In Austria, documentation-related penalties and TP reassessment do not prevent a taxpayer from initiating a MAP or using the EU Arbitration Convention to eliminate double taxation resulting from a TP reassessment.

7. Any other relevant aspect not addressed above?

N/A

B. Country By Country Reporting (“CBCR”)

1. Did your country implement the obligation to file a CbCR? If not, is the introduction of the CbCR in your jurisdiction contemplated and, if so, when?

Yes, it is required when the thresholds are met. See section A/Q1 above.

2. If the obligation to file a CbCR is in force, what is the tax year from which this obligation applies and what is the deadline for filing the CbCR?

The tax year for the CbCR always refers to the circumstances of the MNE group (and therefore generally the ultimate parent) and not to the circumstances of the individual entity. In this respect, it is irrelevant if individual entities have a different financial year and also different financial years within the group. 16 Austrian Transfer Pricing Guidelines (VPR) Mn 407; Bonner, Verrechnungspreise –Dokumentationserfordernisse (version dated 08.8.2023, Lexis Briefings in lex-is360.at). The CbCR then must be submitted within 12 months following the end of the fiscal year.  17 Austrian Transfer Pricing Guidelines (VPR) Mn 407; Bonner, Verrechnungspreise –Dokumentationserfordernisse (version dated 08.8.2023, Lexis Briefings in lex-is360.at).

3. Which taxpayers have to file a CbCR?

A CbCR must be prepared for a multinational group of companies if, according to the consolidated financial statements, the total turnover in the previous financial year was at least EUR 750 million. 18 Section 3 (1) VPDG; Austrian Transfer Pricing Guidelines (VPR) Mn 440.  The threshold value must be calculated on the basis of the same accounting standards used to determine the existence of a group and group membership. If the shares of the ultimate parent company are traded on a public stock exchange, the accounting standards already applied by the group must be used.

The obligation to submit a CbCR applies to the ultimate parent company of an MNE group of companies domiciled in Austria or another business unit domiciled in Austria that has assumed the obligations of the ultimate parent company. 19 Section 4 VPDG; Austrian Transfer Pricing Guidelines (VPR) Mn 441.

4. Is the content of the CbCR fully in line with the OECD model (final report on Action 13 of the BEPS project)? If not, what are the differences?

Yes, Austria’s CbCR is fully in line with the OECD model as outlined in the final report on Action 13 of the BEPS project. Austria has implemented the three-tiered structure recommended by the OECD, including the Master File, Local File and CbCR.

5. What is the penalty for failing to file the CbCR on time? Can local subsidiaries of a foreign group suffer the local penalty if the foreign group has not filed the CbCR?

Failure to submit the CbCR on time, or incomplete submission, can result in fines of up to EUR 50,000 for intentional non-compliance or EUR 25,000 for gross negligence. 20 Bonner, Verrechnungspreise – Dokumentationserfordernisse (version dated 08.8.2023, Lexis Briefings in lexis360.at).

Local subsidiaries in Austria can be penalised if the foreign parent company fails to submit the CbCR, but only when, under Austrian law, the responsibility for filing the report falls on the local subsidiary. This occurs if any of the following conditions are met:

  • the ultimate parent entity is not required to submit the report in its jurisdiction
  • there is no qualifying agreement between Austria and the jurisdiction of the parent entity for the exchange of the report
  • there is a systemic failure in the parent entity’s jurisdiction, such as the suspension or prolonged failure of the automatic exchange of CbCR. 21 Section 5 VPDG.

6. Are there tax treaties in force in your jurisdiction allowing the communication of CbCR with other jurisdictions?

Yes, Austria has several tax treaties in force that allow for the communication of CbCR with other jurisdictions. Also, Austria is a participant in the OECD’s Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports as a member of the EU, and as such, it adheres to the EU Directive 2016/881.

7. Any other relevant aspect not addressed above?

On 5 July 2024, the Austrian CBCR Publication Act (CBCR-Veröffentlichungsgesetz, “CBCR-VG”) was passed in Austria, which serves to implement EU Directive 2021/2101 with regard to the disclosure of income tax information by certain companies and branches. CBCR-VG regulates the publication of CbCR in the Austrian commercial register. It is applicable to financial years beginning after 21 June 2024. 

Obligated to make the CbCR public are ultimate parent companies and unaffiliated companies of corporate groups that meet the thresholds in section B/Q3 if the ultimate parent company or the unaffiliated company is located in Austria. 

Section 9 CBCR-VG specifies the content required in the CbCR including:

  • Name of the ultimate parent company or unaffiliated company, fiscal year, currency and list of relevant subsidiaries
  • description of activities, number of employees, revenue, profit before tax and income tax (both
  • payable and paid)
  • retained earnings at the end of the year

The report covers all activities of the company and its subsidiaries, with explanations for discrepancies if necessary.

Deadlines and language requirements: 22 Section 11 CBCR-VG.

  • company representatives must electronically submit the public CbCR and any required declarations to the Austrian Commercial Court within 12 months after the end of the tax year
  • declarations must be submitted in German, while the public CbCR can be submitted in either German or English
  • the submitted documents are added to the public records of the Austrian Commercial Register and made freely accessible online
  • from the end of the submission deadline and for 5 years thereafter, companies must either publish the documents on their website or provide a link to the free Commercial Register query where the documents can be accessed.

Specific details can be temporarily omitted from the corporate tax report if their immediate disclosure would significantly harm the company’s market position. If omissions are made, they must be noted and justified in the report. All omitted information must be disclosed within 5 years in a subsequent report. The Austrian Commercial Court can review the validity of omissions. If requested, companies must submit the full report without omissions. The report will be kept confidential during the review process, and failure to comply may result in penalties. If the court finds no valid reason for the omission, it will order the report’s publication and may require the company to pay up to EUR 20,000. 23 Section 12 CBCR-VG.

The Austrian Commercial Court can impose fines of up to EUR 10,000 on the representative of the company and possibly the auditor, to ensure timely, complete and accurate submission of the CbCR. If non-compliance persists, fines can increase up to EUR 20,000, EUR 50,000 or EUR 100,000 depending on the company’s size and public interest status.  24 Section 14 CBCR-VG.

C. As the case may be, other documentation/filing requirements in realtion to TP?

1. Are there any other documentation/filing requirements in relation to TP?

In Austria, all business transactions between affiliated companies must be carried out under consideration of the arm’s length principle. Intercompany agreements are to be recognised only if they are properly formulated, have a clear and unambiguous content, and would have been concluded under the same terms and conditions between independent parties.

Where a legal transaction is deemed not to correspond to arm’s length principles, the transaction price is adjusted for CIT purposes. Such an adjustment constitutes either a constructive dividend or a capital contribution. Relevant documentation must be disclosed to the Austrian tax authorities.

2. If so, what is the content of such documentation/filing requirement? What language(s) is to be used by taxpayers?

The taxpayer has the obligation to provide further information and documents in an external audit or otherwise upon request by the Austrian tax authority. 25 Austrian Transfer Pricing Guidelines (VPR) Mn 413.  Any living language can be used but documentation must be translated into German at the request of the tax authorities. 26 Austrian Transfer Pricing Guidelines (VPR) Mn 431.

3. What is the deadline for meeting this documentation/filing requirement?

N/A

4. Does this obligation apply to all taxpayers or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

It applies to all taxpayers.

5. What is the penalty for failing to meet this requirement on time?

N/A

6. Any other relevant aspect not addressed above?

N/A