Finance (MoF) published the government bill of the European Union (EU) Tax Amendment Act 2016, including among other provisions, the new Austrian Transfer Pricing Documentation Law (TPDL). This follows the publication of the draft TPDL on 9 May 2016 as well as the draft regulation for the implementation of the TPDL on 25 May 2016.
Master file: The TPDL does not define the exact content of the Master File and the Local File. However, it is stipulated that the Master File has to provide comprehensive information on the whole group and according to the government bill, specifically address:
-Organizational structure of the MNE group;
– Description of the MNE’s business;
– Documentation of MNE’s intangibles;
-Documentation of the inter-company financial activities; and
-Documentation of MNE’s financial and tax positions.
Local file-Information: The Local File has to provide specific information on the business activities and transactions of the local constituent entity and again according to the bill, specifically address:
-Description of the local constituent entity;
-Documentation of material controlled transactions;and
– Financial Information.
CbC reporting requirement: A CbC report has to be prepared if the total turnover generated by the MNE group stated in the consolidated annual financial statements of the previous fiscal year amounts to at least €750 million. According to the TPDL, the entire documentation has to be prepared in a language officially permitted for tax proceedings (typically German) or English. The TPDL enables the Finance Minister to issue a regulation determining that certain parts of the CbC report need to be prepared in English. The explanatory statements state that this authorization is necessary as parts of the CbC report need to be transmitted to foreign tax authorities in English.
Review time: The CbC report has to be filed electronically with the competent tax office within 12 months after the end of the respective fiscal year (via FinanzOnline). Both the Master File and the Local File have to be submitted upon request of the competent tax office within 30 days after the constituent entity files its tax return (i.e., the earliest deadline for the submission of the Master File and the Local File is 30 days after filing the tax return of the respective year). The required documentation (Master File and Local File as well as the CbC report) generally has to be prepared for fiscal years starting from 1 January 2016. In cases where a constituent entity was officially designated by notice as the surrogate parent entity, the submitted information can refer to fiscal years starting from 1 January 2017.
Penalty for non-compliance: If the CbC report is not filed in time due to gross negligence or intent, or the required items in the table in appendices 1 to 3 of the law are not or incorrectly filed, the government bill stipulates penalties of up to €25,000 for gross negligence and up to €50,000 for intent. While penalties are to be imposed, legal prosecution (by courts) for such financial law offenses is excluded by the law.
