Austria’s Federal Fiscal Court ruled that the extended 10-year statute of limitations for tax evasion cannot be applied without proof of intent, finding that a public wastewater association acted in good faith on professional tax advice and therefore remained subject to the standard five-year limitation period.
The Austrian Ministry of Finance has published a decision of the Federal Fiscal Court (BFG) confirming that the extended 10-year statute of limitations for tax evasion cannot be applied without evidence of intent, overturning a tax office’s attempt to reopen VAT assessments for 2015 to 2017.
The case concerned a public wastewater association that had relied on professional tax advice received between 2013 and 2015. The advice stated that provision, financing and renovation fees charged to members represented loan repayments and were therefore not subject to VAT. Based on that assessment, the association did not charge or remit VAT on the payments.
In 2024, a new tax representative reviewed the arrangement and concluded that the treatment was inconsistent with Austrian case law. The association then voluntarily disclosed the error to the tax authorities.
In March 2025, the tax office sought to reopen the VAT assessments for 2015, 2016 and 2017. It argued that the taxes had been evaded and that the extended 10-year limitation period under Section 207(2) of the Federal Fiscal Code (BAO) applied.
The BFG rejected that position and ruled in favour of the taxpayer. The court stated that tax evasion requires intent (Vorsatz), meaning a taxpayer must have considered a tax reduction seriously possible and accepted that outcome. A mere underpayment of tax is not sufficient to establish tax evasion.
According to the court, the association had acted in good faith by seeking and following professional tax advice, even though that advice later proved to be incorrect. The judges also pointed to the voluntary disclosure made after the error was discovered as evidence that there had been no intention to evade taxes.
The court further criticised the tax office for failing to investigate the taxpayer’s state of mind and for relying primarily on the voluntary disclosure itself as evidence of alleged tax evasion.
Because no intentional tax evasion was established, the BFG held that the ordinary five-year statute of limitations applied. As that limitation period had already expired for the years in question, the reopening of the VAT proceedings was unlawful. The court therefore revoked the contested assessments and the tax office’s decision to reopen the cases.
