On 29 March 2017, the Austrian Supreme Administrative Court ruled that foreign tax losses suffered by a company while being subject to limited tax liability in Austria cannot be utilized as loss-carry forwards in Austria, even after the company has become subject to unlimited tax liability in Austria.

In the case at hand during 2002 and 2003 a German company operated its business exclusively in Germany. In 2004, the company physically moved its German permanent establishment to Austria and at the same time also moved its place of management to Austria. Technically, this move was accompanied by a change of the company from limited tax liability (liability on Austrian source income) to unlimited tax liability (liability on worldwide income) in Austria. After the move, the company claimed a deduction in Austria of tax losses incurred in Germany during the years 2002 and 2003 as loss-carry forwards (Verlustvorträge). However, neither the competent tax office nor the Austrian Federal Tax Court followed the company's view. 

In its judgment (29 March 2017, Ro 2015/15/0004), the Austrian Supreme Administrative Court denied the deduction of the tax losses incurred in Germany as loss-carry forwards in Austria, since losses of a company subject to limited tax liability in Austria can only be taken into consideration if they are attributable to a domestic permanent establishment of the company. Consequently, this also applies to a company currently subject to unlimited tax liability to the extent that the losses were incurred at a point in time when the company was subject to limited tax liability.  

By reference to the case law of the European Court of Justice, the Austrian Supreme Administrative Court also stated that the denial of the deductibility of the contested tax losses does not infringe upon the freedom of establishment (Niederlassungsfreiheit).