Foundation Income Tax Act

According to the Foundation Income Tax Act , an input tax of 2.5% of the donation is due for free donations to an Austrian private foundation . Benefits of the Inheritance and Gift Tax Act (e.g. tax exemption for the death-related transfer of final taxed capital assets or for monetary and material donations to charitable foundations) remain applicable. Under certain conditions, the foundation entry tax rate is 25% ( penalty tax ). This is the case, for example, with donations to foreign foundations if the foundation or comparable assets are not comparable to an Austrian private foundation, or if not all documents are disclosed to the domestic tax authorities, or if the foundation's country of residence does not provide comprehensive administrative and enforcement assistance consists. The existence of one of these three conditions is sufficient for the application of the 25% tax rate. This higher tax rate affects foundations / estates outside the EU in particular, because outside the EU there is only comprehensive official and enforcement assistance with the EEA state of Norway ( see below for Liechtenstein ).

Legal basis

As a replacement for the repealed provisions of the Austrian Inheritance and Gift Tax Act (as of July 31, 2008), a “new” input and donation taxation was introduced with regard to donations to foundations and foundation-like assets. This was done through the federal law on a foundation entry tax law of March 30, 2008 ( Federal Law Gazette I No. 85/2008 , StiftEG). The previous tax rates from the Inheritance and Gift Tax Act are partially retained (for foundations and similar estates) and in certain cases a “ sanction tax” is levied.

scope of application

Personal scope

The Foundation Income Tax Act has as a personal area of application both the donor (e.g. founder ) and those who acquire the assets directly (e.g. the foundation ). The beneficiaries of the foundation do not fall into the personal scope of application, as they are neither directly nor indirectly mentioned in the legal text as tax debtors of the foundation input tax . It is thus from the personal scope of the Austrian Foundation Income Tax Act z. E.g. the Austrian (natural or legal) founder as well as any non-Austrian foundation or comparable assets (e.g. private law institution , one-man trust , closed [qualified] fund etc.) are affected by the Austrian Foundation Income Tax Act .

Material scope

The transfer of assets (material scope of application) concerns both the transfer of death due to death as well as "any kind" of free donation among the living (e.g. donation ) to private foundations or comparable assets (§ 1 Paragraph 1 in conjunction with Paragraph 3 StiftEG).

Tax liability

Due to the territorial restriction of Austrian tax law, the tax liability can generally only affect the domestic (Austrian) foundation (estate) or the domestic (Austrian) founder directly. However, the latter assumes full liability for the tax liability if the founder or the foundation (assets) is not domiciled , habitually resident or the place of management or headquarters in Austria.

Calculation and display

The Austrian founder or the foundation (assets) is also responsible for the proper notification of the donation (declaration of tax liability), the correct self-calculation of the tax and timely payment (§ 3 Paragraph 1 and 2 StiftEG).

Union conformity of the tax rate

From the point of view of the non-discrimination required by Union law, foreign private foundations were treated as equal to Austrian private foundations with regard to the level of the entry tax rate and income taxation.

Application to Liechtenstein foundations

According to the " Agreement between the Principality of Liechtenstein and the Republic of Austria on cooperation in the field of taxes " of January 29, 2013, Art 33 ff, the tax rate for non-transparent asset structures

in the case of disclosure in accordance with § 2 Paragraph 1 lit. b StiftEG usually 5% (Art 33 Agreement of January 29, 2013);
if no disclosure is made in accordance with Art 33 Agreement of January 29, 2013, 7.5% or 10%.

On January 1, 2014, two new provisions (lit. c and d) were introduced in the StiftEG in Section 2. According to this, the increased tax rate of 25% must also be applied if

the foundation or comparable assets are not subject to a legal obligation corresponding to § 5 of the Private Foundation Act to notify the beneficiaries or
the foundation or comparable assets are not entered in the commercial register or a comparable foreign public register with submission of the foundation deed (statute).

These two criteria apply to a large number of foundations from Liechtenstein, which means that the regulation on the reduced tax rate in the aforementioned agreement between Liechtenstein and Austria on tax cooperation is largely obsolete.

criticism

The Foundation Incoming Tax Act, like the Gift Registration Act , was already heavily criticized by practice, academic literature and teaching before it came into force in Austria and is said to have systemic gaps and (legally dogmatic and constitutionally unnecessary) tightening compared to the previous legal situation, among other things raise significant constitutional problems or carry on the constitutionally questionable legal situation from the inheritance and gift tax law. Last but not least, the criticism also relates to the changes in the (tax) legal starting position that are (disadvantageous) for the Austrian financial center , which do not offer the security and continuity for foundations that are considered necessary for the Austrian financial center.

Constitutional conformity of the StiftEG

The Austrian Constitutional Court (VfGH) ruled in decision G 150/10 of March 2, 2011 that there were no constitutional objections to the basic offense of the foundation entry tax as such (margin no. 2.3). The Constitutional Court has stated that a tax of the type of foundation entry tax - " at least in the current form - is within the legislative scope of legal policy ". The Constitutional Court did not follow the complainant (an Austrian private foundation) 's argument that " there are constitutional concerns about the tax as such " (margin no. 2.2 f) and which suggested a fundamental examination of the StiftEG in the case (B1473 / 09).

With regard to the valuation of assets that are donated to the foundation, the VfGH has recognized that the last sentence of Section 1 (5) StiftEG will expire on December 31, 2011.

literature

Christoph Kerres, Florian Proell, “ The new legal regulations on foundation entry tax in Austria ” ecolex 2008, 567 ff.

Austrian Chamber of Notaries, " Statement of April 15, 2008", GZ: 181/08; smp.

Austrian Bar Association, " Statement on the Foundation Income Tax Act" (Statement from April 10, 2008, Zl. 13/1 08/50, GZ 010000/0002-VI / 1/2008).

Florian Proell " European legal aspects of the sanction taxation of the Foundation Incoming Tax Act 2008 ", taxlex 2008, 239 ff.

Anton Schäfer , " What does" comprehensive "mean in the Foundation Income Tax Act? ", Liechtensteinische Juristerneitung , 1/2009, 1 ff.

Peter Melicharek, “ New Foundation Income Tax from 2014: Migration to Liechtenstein made more difficult ”, article onwirtschaftsanwälte.at .

Sources and References

↑ See § 8 Paragraph 3 Inheritance Tax Act. A private foundation within the meaning of Austrian legal provisions is a legal entity without owners or members to which a founder devotes assets in order to serve a purpose determined by the founder (legally permitted) through the use, administration and exploitation of the same. Foreign foundations are those that have not been set up on the basis of Austrian legal provisions (see Section 1, Paragraph 1 of the Private Foundation Act (PSG).
↑ § 2 para. 1 lit. a) StiftEG.
↑ § 2 para. 1 lit. b) StiftEG.
↑ § 2 para. 1 lit. e) StiftEG (until December 31, 2013: Section 2 (1) c) StiftEG).
^ Resolved on June 6, 2008 by the Austrian National Council. The federal law on a foundation income tax law was regulated in Art 7 of the Gift Registration Act 2008 and came into force on August 1, 2008
↑ § 1 Paragraph 5 StiftEG. Donations to foundations (not other donations - donations, these are partially tax-exempt in Austria) are assessed (with the exception of Section 3 (4) StiftEG) according to Section 19 ErbStG. The Valuation Act and the 3-fold unit value for domestic properties or for foreign property the common value or optionally a triple (simulated) " unit value" remains decisive . To what extent this regulation will exist before the Constitutional Court remains to be seen. The previous preferential treatment for private foundations through the flat rate of tax is now a burden or a disadvantage, now that the previous, much higher rates of inheritance and gift tax are no longer applicable.
↑ § 2 Paragraph 1 StiftEG. The term " sanction tax " or " foundation criminal tax " is not an official term in law.
↑ § 1 Abs. 3 StiftEG: " Tax debtor is the purchaser. In the case of donations between living persons, the person liable for tax is the donor if the purchaser has neither the seat nor the place of management in Germany. The other person is liable for the tax as well as the inheritance in the case of acquisitions due to death. "
↑ All foreign foundations are recognized by the Austrian tax authorities as legal entities with their own legal personality and (at least) as corporation tax subjects.
↑ FL-LGBl 432/2013; ÖBGBl III No. 301/2013.
↑ The tax is 2.5% of the donations. Deviating from this, the tax amounts to 25% for donations if (§ 2 Para. 1 lit. b StiftEG) "all documents in the currently valid version that concern the internal organization of the foundation or comparable assets, asset management or the use of assets (such as in particular Foundation deed, foundation supplementary deeds and comparable documents), have not been disclosed to the responsible tax office at the latest when the foundation entry tax is due or ... "
↑ The previous lit. c) became lit. e).
↑ See u. a .: Peter Melicharek in "Foundation entry tax new from 2014: Migration to Liechtenstein made even more difficult".
↑ See e.g. B .: Federal Chancellery Constitutional Service, GZ ● BKA-602.548 / 0001-V / 7/2008, opinion on Article 4 of the Gift Registration Act 2008 (amendment to § 121a of the Federal Tax Code in conjunction with § 1 (2) DSG 2000 and with regard to § 6 DSG 2000). See also circular on the legal design of encroachments on the fundamental right to data protection (G ● 2 BKA-810.016 / 0001-V / 3/2007), item 6 .; Austrian Chamber of Notaries, " Statement of April 15, 2008", GZ: 181/08; smp .; Austrian Bar Association , " Statement on the Foundation Income Tax Act" (Statement of April 10, 2008, Zl. 13/1 08/50, GZ 010000/0002-VI / 1/2008); Prof. Josef Schuch (Finance Law, Vienna University of Economics and Business) said in the 2008/18/03 Standard on the Gift Registration Act that he “ has hardly seen a law in recent years that has failed so legally and politically. “Here,“ in view of the panic in Germany over Liechtenstein, an uncontrolled and erratic shot would be taken ”.
↑ Especially with regard to the so-called "unit value". The unit value is a value determined by the responsible tax office with an individual decision for a specific property only for taxation purposes. As a rule, this fixed value is significantly below the market value. The unit value is the basis, for example, for calculating the property transfer tax and for other taxes and contributions such as land value tax, tax and contributions from agricultural and forestry operations, for determining the contribution bases under social insurance law for agricultural and forestry operations in Austria and was also the basis for inheritance and gift tax until it was not applied on July 31, 2008. For this justified criticism, see also the decision of the Austrian Constitutional Court in G 150/10.
↑ § 1 Paragraph 5 StiftEG reads: " The tax is to be calculated from the allocated assets after deduction of debts and burdens that are economically related to the allocated assets. The time at which the tax liability arises is decisive for the valuation - subject to Section 3 (4) - Section 19 of the Inheritance and Gift Tax Act 1955 shall apply. "
↑ This in accordance with Art. 140 para. 5 third and fourth sentence B-VG . This is intended to enable the legislature to " regulate the basis of assessment of the foundation input tax in a constitutionally compliant manner, with Section 3 (4) of the StiftEG also to be taken into account " (VfGH in the decision cited, point IV, point 2.).

[1] See § 8 Paragraph 3 Inheritance Tax Act. A private foundation within the meaning of Austrian legal provisions is a legal entity without owners or members to which a founder devotes assets in order to serve a purpose determined by the founder (legally permitted) through the use, administration and exploitation of the same. Foreign foundations are those that have not been set up on the basis of Austrian legal provisions (see Section 1, Paragraph 1 of the Private Foundation Act (PSG).

[2] § 2 para. 1 lit. a) StiftEG.

[3] § 2 para. 1 lit. b) StiftEG.

[4] § 2 para. 1 lit. e) StiftEG (until December 31, 2013: Section 2 (1) c) StiftEG).

[5] Resolved on June 6, 2008 by the Austrian National Council. The federal law on a foundation income tax law was regulated in Art 7 of the Gift Registration Act 2008 and came into force on August 1, 2008

[6] § 1 Paragraph 5 StiftEG. Donations to foundations (not other donations - donations, these are partially tax-exempt in Austria) are assessed (with the exception of Section 3 (4) StiftEG) according to Section 19 ErbStG. The Valuation Act and the 3-fold unit value for domestic properties or for foreign property the common value or optionally a triple (simulated) " unit value" remains decisive . To what extent this regulation will exist before the Constitutional Court remains to be seen. The previous preferential treatment for private foundations through the flat rate of tax is now a burden or a disadvantage, now that the previous, much higher rates of inheritance and gift tax are no longer applicable.

[7] § 2 Paragraph 1 StiftEG. The term " sanction tax " or " foundation criminal tax " is not an official term in law.

[8] § 1 Abs. 3 StiftEG: " Tax debtor is the purchaser. In the case of donations between living persons, the person liable for tax is the donor if the purchaser has neither the seat nor the place of management in Germany. The other person is liable for the tax as well as the inheritance in the case of acquisitions due to death. "

[9] All foreign foundations are recognized by the Austrian tax authorities as legal entities with their own legal personality and (at least) as corporation tax subjects.

[10] FL-LGBl 432/2013; ÖBGBl III No. 301/2013.

[11] The tax is 2.5% of the donations. Deviating from this, the tax amounts to 25% for donations if (§ 2 Para. 1 lit. b StiftEG) "all documents in the currently valid version that concern the internal organization of the foundation or comparable assets, asset management or the use of assets (such as in particular Foundation deed, foundation supplementary deeds and comparable documents), have not been disclosed to the responsible tax office at the latest when the foundation entry tax is due or ... "

[12] The previous lit. c) became lit. e).

[13] See u. a .: Peter Melicharek in "Foundation entry tax new from 2014: Migration to Liechtenstein made even more difficult".

[14] See e.g. B .: Federal Chancellery Constitutional Service, GZ ● BKA-602.548 / 0001-V / 7/2008, opinion on Article 4 of the Gift Registration Act 2008 (amendment to § 121a of the Federal Tax Code in conjunction with § 1 (2) DSG 2000 and with regard to § 6 DSG 2000). See also circular on the legal design of encroachments on the fundamental right to data protection (G ● 2 BKA-810.016 / 0001-V / 3/2007), item 6 .; Austrian Chamber of Notaries, " Statement of April 15, 2008", GZ: 181/08; smp .; Austrian Bar Association , " Statement on the Foundation Income Tax Act" (Statement of April 10, 2008, Zl. 13/1 08/50, GZ 010000/0002-VI / 1/2008); Prof. Josef Schuch (Finance Law, Vienna University of Economics and Business) said in the 2008/18/03 Standard on the Gift Registration Act that he “ has hardly seen a law in recent years that has failed so legally and politically. “Here,“ in view of the panic in Germany over Liechtenstein, an uncontrolled and erratic shot would be taken ”.

[15] Especially with regard to the so-called "unit value". The unit value is a value determined by the responsible tax office with an individual decision for a specific property only for taxation purposes. As a rule, this fixed value is significantly below the market value. The unit value is the basis, for example, for calculating the property transfer tax and for other taxes and contributions such as land value tax, tax and contributions from agricultural and forestry operations, for determining the contribution bases under social insurance law for agricultural and forestry operations in Austria and was also the basis for inheritance and gift tax until it was not applied on July 31, 2008. For this justified criticism, see also the decision of the Austrian Constitutional Court in G 150/10.

[16] § 1 Paragraph 5 StiftEG reads: " The tax is to be calculated from the allocated assets after deduction of debts and burdens that are economically related to the allocated assets. The time at which the tax liability arises is decisive for the valuation - subject to Section 3 (4) - Section 19 of the Inheritance and Gift Tax Act 1955 shall apply. "

[17] This in accordance with Art. 140 para. 5 third and fourth sentence B-VG . This is intended to enable the legislature to " regulate the basis of assessment of the foundation input tax in a constitutionally compliant manner, with Section 3 (4) of the StiftEG also to be taken into account " (VfGH in the decision cited, point IV, point 2.).