A revised draft bill of the 2014 Tax Amendment Act (Abgabenänderungsgesetz 2014; AbgÄG 2014) was forwarded to the Austrian Parliament on 29 January 2014. The revised draft bill modifies the initial draft bill with amendments to certain Austrian Tax Acts published on 9 January 2014. Significant changes to current legislation are planned.
As of 1 March 2014, interest and royalty payments to domestic and foreign affiliated corporations shall no longer be tax deductible if the income of the recipient corporation (beneficial owner) is subject to a nominal tax rate or a specific tax rate applicable to interest or royalty income of less than 10%; not subject to taxation due to a tax exemption of the person or the income; or subject to a tax rate of less than 10% (effective tax rate) under certain specific tax regimes.
The limitations to tax deductibility shall not apply if the tax rate of the recipient of interest or royalty income is below 10% due to the taxpayer’s own losses or losses allocated under a tax group/consolidation regime. The limitations to tax deductibility shall be applicable to all interest and royalty payments to affiliated corporations as of 1 March 2014, irrespective of when the underlying agreement was actually concluded.
