Austrian tax law enables taxpayers to avoid criminal tax sanctions or penalties in case of fiscal offences by submitting a voluntary disclosure. The taxpayer’s exemption from any criminal tax sanctions on account of having submitted a voluntary disclosure is subject to specific preconditions. A draft tax bill on the Amendment of the Austrian Fiscal Criminal Tax Act 2014 (Finanzstrafgesetznovelle 2014) that is currently pending for vote in the Austrian Parliament is set to tighten these requirements significantly. The new rules are expected to enter into force as of 1 October 2014.
No amnesty for repeated voluntary disclosures
Currently, a taxpayer may submit a voluntary disclosure a second time for the identical tax claim without losing the effect of being relieved from potential criminal tax sanctions. Such repeated (second) disclosure is currently (only) subject to the taxpayer paying a punitive penalty amounting to 25% of the amount of additional tax disclosed to the tax authorities. Pursuant to the currently pending bill, a repeated voluntary disclosure for the identical tax claim will no longer relieve the taxpayer from potential criminal tax matters. As a result, any incomplete first disclosure can no longer be rehabilitated with an amnesty effect from a criminal tax law perspective. However, the amnesty effect of the first disclosure for that part of taxes disclosed therein (if correctly submitted) will not be affected by an additional disclosure for the identical tax claim.
From a practical perspective, taxpayers are advised to submit comprehensive and full disclosures with respect to tax matters in order to avoid jeopardizing the disclosure’s amnesty effect.
Additional punitive payments in exchange for amnesty
In addition, the tax bill introduces the requirement of an additional punitive payment for those tax offences committed intentionally or grossly negligently which are disclosed shortly after the announcement of a tax audit (or similar measures) by the tax authorities. More precisely, if a tax audit, inspection, clearance or examination has been announced by the tax authority, a voluntary disclosure may be submitted; however, the amnesty effect thereof will only be given in case of fiscal offences committed intentionally or grossly negligently if in addition to the amount of tax due, an additional punitive payment is effected. The amount of such payment is calculated based on a percentage of the outstanding amount of the total of any taxes, penalties, and interest not levied as a result of the fiscal offense. Generally, the additional payment amounts to 5% of such amount. Higher percentages apply in case the outstanding amount exceeds EUR 33,000 (15%), EUR 100,000 (20%), or even EUR 250,000 (30%).
Since a voluntary disclosure of slightly negligent fiscal offences may be rendered after the announcement of a tax audit (or similar measures) without the necessity to effect an additional payment and still remain within the scope of the amnesty effect, the (rather difficult) determination of whether a taxpayer has committed a fiscal offence with either slight or gross negligence becomes significantly more relevant. Furthermore, still unchanged in case of tax offences committed intentionally, a voluntary disclosure will not have any amnesty effect at all if rendered after the tax audit’s commencement.
The focus on these new rules is obviously to encourage taxpayers to submit voluntary disclosures in a timely manner (ie before a tax audit is announced or commences) and in a comprehensive manner if they seek to avoid criminal tax sanctions. More than ever, in order to be in a position to ensure the amnesty effect of a voluntary disclosure, a comprehensive analysis and review of the taxpayer’s affairs is required if fiscal offences might have been committed. Any oversights or incompleteness may either render the disclosure void or at least result in higher punitive payments.