The Austrian Ministry of Finance published revised corporate income tax guidelines in March 2013, to tightening the rules with respect to interest deductions in connection with “debt push-down models” and concerning tax loss carry forwards claimed by certain companies. The guidelines-BMF-010216/0009-VI/6/2013— specify a more restrictive approach by the Austrian tax authorities with respect to the tax treatment of certain interest deductions and loss carry forwards in coming years which may affect Austrian companies involved in acquisitions, mergers or reorganizations.
From 2011 Austria has already restricted the tax deduction for interest paid on loans from related parties for the acquisition of shares. Under the new 2013 corporate income tax amended guidelines, if a transaction is related to the acquisition of the entire group of which the Austrian target is a member, interest deductions will be denied―even if there is a straight third-party sale of an Austrian target company by an Austrian acquiring company.
With the introduction of these 2013 guidelines, a strict substance-over-form approach is now applied in considering these transactions. Under this method, if the individuals who were actually managing the business are replaced, a change in the organizational structure will be assumed.
