Foundation penalty tax

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The foundation tax is an Austrian tax on free donations to foundations , whereby the donor, the donation or the recipient of the donation does not meet a certain criterion according to the StiftEG and therefore a ten times higher tax rate is applied (see below).

The Austrian founder or foundation (estate) is responsible for the proper notification of the donation (declaration of tax liability), the correct self-calculation of the tax and the timely payment (Section 3 Paragraphs 1 and 2 StiftEG). The foundation input tax was introduced as input and donation tax as a replacement for the repealed provisions from the inheritance and gift tax law with regard to donations to foundations and foundation-like assets (foundation input tax law).

Legal basis

The Austrian Foundation Income Tax Act (StiftEG) has assigned various facts to ten times the "normal tax rate". The normal tax rate according to Section 2 (1) StiftEG is 2.5% of the donation to a foundation or comparable asset. An increased tax rate of 25% of the grant applies in accordance with Section 2 (1) lit a) to c) StiftEG, if

  • the foundation or comparable asset that receives the grant is not comparable to a private foundation under the Austrian Private Foundation Act (PSG), or
  • all documents in the currently valid version that relate to the internal organization of the foundation or comparable assets, asset management or the use of assets (such as, in particular, foundation deeds, additional foundation deeds and comparable documents) have not been disclosed to the responsible tax office at the latest when the foundation input tax is due ,
  • 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) or
  • There is no comprehensive official or enforcement assistance with the country of residence of the foundation or comparable assets .

This increased tax rate of 25% of the donation in the StiftEG is also known as the “foundation tax” or “ sanction tax ”. The designation as foundation tax or sanction tax is not an official designation, but has emerged in legal practice.

Liechtenstein

With 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 original "penalty tax rate" for Liechtenstein foundations was reduced by 25% (this has been in effect since it came into force of the StiftEG in 2008). The tax rate for non-transparent asset structures is now

  • 5% in the event of disclosure (Section 2 Paragraph 1 Letter b and Article 2 Paragraph 2 Letter b StiftEG, Article 33 Agreement of January 29, 2013)
  • 7.5% or 10% if no disclosure is made in accordance with Art. 33 Agreement of January 29, 2013.

Due to the new provisions introduced in Section 2 of the StiftEG on January 1, 2014 in let. c) and d), however, the increased tax rate of 25% will continue to apply to a large number of foundations based in Liechtenstein in most tax applications. The regulations on the reduced tax rate in the aforementioned agreement between Liechtenstein and Austria on tax cooperation are therefore largely obsolete.

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 of April 10, 2008, Zl. 13/1 08/50, GZ 010000/0002-VI / 1/2008).
  • Peter Melicharek, “ New Foundation Income Tax from 2014: Migration to Liechtenstein made more difficult ”, article onwirtschaftsanwälte.at .
  • 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? “, Liechtenstein Legal Journal, 1/2009, 1 ff.

Sources and References

  1. ↑ 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) .
  2. ↑ Foundation Income Tax Act of March 30, 2008. Adopted by the Austrian National Council on June 6, 2008 . The Federal Law on Foundation Income Tax Law (ÖBGBl I 85/2008, StiftEG) was regulated in Art 7 of the Gift Registration Act 2008 and came into force on August 1, 2008.
  3. ↑ 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.
  4. ↑ 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 supposed to have gaps in the system and (legally and legally unnecessary) tightening compared to the previous legal situation and among other things thereby raise considerable constitutional problems or carry on the constitutionally questionable legal situation from the inheritance and gift tax law.
  5. ↑ This open formulation in Section 2 Paragraph 1 lit. a) StiftEG will in practice probably cause considerable difficulties in the interpretation and thus contribute to legal uncertainty in Austrian foundation law. This provision should primarily affect the trust and the private law institutions . The problem with the trust arises mainly from the fact that it is usually not an independent legal entity .
  6. ↑ Probably also "letter-of-wishes" from the founder
  7. ↑ According to this wording in § 2 Paragraph 1 lit. b) StiftEG to determine at the free discretion of the responsible tax authority which "comparable documents" would have to be submitted from the ex-post point of view in order not to trigger the increase in the tax to 25%. In practice, this can lead to the fact that completely arbitrarily other documents have to be disclosed in each case, depending on which body of the tax authority classifies which documents as relevant in retrospect, as the legal text does not provide any definition or restriction or instructions for the tax authority. In order to ward off its own liability and this increased tax rate, a foundation or other comparable asset must disclose any internal documents of the Austrian tax authorities, regardless of whether these are actually relevant for the calculation of the foundation input tax or not. A situation that is more than unsatisfactory for everyone involved. Unfortunately, the related and multiple criticism of the draft from practice and teaching of this formulation was not taken into account in the law.
  8. ↑ This provision under § 2 Paragraph 1 lit. c) StiftEG came into force on January 1, 2014.
  9. ↑ This provision under § 2 Paragraph 1 lit. d) StiftEG came into force on January 1, 2014.
  10. ↑ This provision was up to December 31, 2013 § 2 para. 1 lit. c) StiftEG and since January 1, 2014 it is now under § 2 para. 1 lit. e) to find.
  11. ↑ See for example the Austrian Bar Association in the statement on the Foundation Income Tax Act under Item II.2.cc (statement of April 10, 2008, Zl. 13/1 08/50, GZ 010000/0002-VI / 1/2008). Anton Schäfer in “ What does“ comprehensive ”mean in the Foundation Income Tax Act? “, Liechtenstein Legal Journal, 1/2009, 1 ff, Point A.4
  12. ↑ Christoph Kerres and Florian Proell, “ The new legal regulations on foundation input tax in Austria ” in ecolex 2008, 567 ff.
  13. ↑ FL-LGBl 432/2013; ÖBGBl III No. 301/2013.
  14. ↑ See also Liechtensteiner Volksblatt dated December 19, 2013, p. 5: “Austrian experts expect donors to flee to Vaduz”
  15. ↑ The previous lit. c) became lit. e).
  16. ↑ See u. a .: Peter Melicharek in "Foundation entry tax new from 2014: Migration to Liechtenstein made even more difficult".