Commencing disputesi Tax dispute resulting from original tax decree or a tax audit
In principle, Austria has an assessment-based tax procedure. This means that a taxpayer is required to file a tax return. Following such return, an Austrian tax authority will issue a tax decree which determines and assesses the due tax. If the taxpayer disagrees with a tax notice, he or she can file an appeal within one month after delivery.
Any tax return that is filed with the Austrian tax authorities is subject to a plausibility check before a tax decree is issued. Normally, the taxpayer's information is reviewed in more detail only if certain aspects of the filed tax return are unclear to the Austrian tax authorities. More often such review is made after the tax assessment. Under Austrian statutory law, any tax notice may be corrected by the Austrian tax authorities without further reasoning given within one year.
Further, a tax decree can be amended as a consequence of a tax audit within the statutes of limitation, which, generally, is six years after the year for which the tax return was filed. In the case of deliberate tax evasion the statute of limitation is 10 years. However, if the Austrian tax authorities undertake investigative actions within the respective last year, the statute of limitation is extended for one additional year. In any case, the right to assess taxes is time-barred after 10 years.ii Subject matter of the appeal
If a decree by an Austrian tax authority infringes the taxpayer's rights, an administrative appeal can be filed by the taxpayer within one month after the delivery of the decree. This deadline may, upon the application of the taxpayer, be (also repeatedly) extended by the Austrian tax authorities for 'good reason'. The appeal has to be filed with the Austrian tax authority that issued the decree.iii Administrative appeal procedure
After the administrative appeal has been filed the Austrian tax authority will review the case and render an administrative appeal decision. However, there will be no administrative appeal decision if the taxpayer has requested that the authority refrains from doing so in the administrative appeal or if the taxpayer only claims that a regulation is not in line with the statutory law, a statutory law is unconstitutional or that international conventions are unlawful. Also, there will be no administrative appeal decision if the decree that shall be appealed against has been issued by the Federal Ministry of Finance. The objective of this procedure is a level of administrative self-control.
The Austrian tax authority's decision on the administrative appeal becomes final and binding if the taxpayer does not request the submission of the matter to the Federal Tax Court within one month after the delivery of the administrative appeal decision.
If the Austrian tax authority does not render its administrative appeal decision within six months after the filing of the administrative appeal, the taxpayer may lodge a complaint with the Federal Tax Court for the reason of the inactivity of the Austrian tax authority. In this case the Federal Tax Court will grant the Austrian tax authority an additional period of three months (which can be extended once for good reason), after which the Federal Tax Court becomes competent for the decision of the appeal. The Austrian tax authorities often require up to one year to render a decision.iv Judicial appeal procedure
If the taxpayer is not satisfied with the administrative appeal decision by the Austrian tax authority, he or she must request submission of the appeal to the Federal Tax Court within one month after the delivery of the decision. If the submission is requested in time, the appeal procedure is deemed undecided and the Federal Tax Court becomes competent for the appeal. The Federal Tax Court is competent from the beginning if the taxpayer has requested a direct decision by the Federal Tax Court in the appeal and the Austrian tax authority has forwarded the appeal to the Court.
Taxpayers may represent themselves in Federal Tax Court procedures. Alternatively, they may be represented by a professional representative such as an attorney at law, a (registered) tax adviser or a certified public accountant. Federal Tax Court procedures follow the principle of official investigation. The Federal Tax Court will investigate the facts and circumstances ex officio. It may reject the appeal as unfounded or allow the appeal, which leads to the annulment or revision of the contested decision or decree. The Federal Tax Court can change the contested decision in all directions, including to the detriment of the taxpayer. If the taxpayer does not request a public hearing, it is up to the court's discretion to decide in a closed session or to hold a public hearing before its decision.v Legal appeal to the Supreme Administrative Court
A legal appeal against a decision of the Austrian Federal Tax Court may be filed with the Supreme Administrative Court, which is the second and last judicial instance in tax matters in Austria. The legal appeal can either be filed by the taxpayer or by the Austrian tax authority. The legal appeal must be submitted within a period of six weeks, which cannot be extended. The legal appeal is decided upon by the Supreme Administrative Court. There is no minimum threshold amount necessary to file a legal appeal. The legal appeal has to be addressed to the Federal Tax Court, which decides whether the procedural requirements are met.
In order to be admissible the matters brought before the Supreme Administrative Court must address fundamental questions so that the Court may ensure the uniformity of the application of the (tax) law. The Supreme Administrative Court decides on the admissibility of the legal appeal based on these criteria. A legal appeal to the Supreme Administrative Court may even be possible if the Federal Tax Court considers it inadmissible. In this case additional arguments must be made in the legal appeal.
The Supreme Administrative Court does not decide on the facts and circumstances of the case, but only rules on questions of law and on errors of law or procedure, which might have influenced the wrong ascertainment of facts. The Supreme Administrative Court will not perform any factual investigations, nor will it review the facts and circumstances provided by the Federal Tax Court. No new facts will be considered by the Supreme Administrative Court. Only if procedural rules have been neglected, which, if considered appropriately, would have led to a different fact finding, may the Supreme Administrative Court annul the contested decision and refer the case back to the Federal Tax Court.
At the Supreme Administrative Court representation by an attorney, a (registered) tax adviser or a certified public accountant is mandatory. The Court decides either by an annulment of the contested decision (referring the case back to the Federal Tax Court) or by a rejection of the legal appeal. In rare cases, where there is no need for further investigation of the facts and circumstances, it has also the authority to rule in the case by changing the contested decision. Additionally, the Supreme Administrative Court is obliged to refer a case to the Constitutional Court if it considers a legal provision to be incompatible with the Austrian Constitution or to the European Court of Justice if a question arises that needs to be interpreted under EU law or in the case of doubts with regard to the compatibility of a domestic tax provision with EU law.vi Alternative procedure before the Constitutional Court
If a taxpayer is of the opinion that a decision of the Federal Tax Court infringes their constitutional rights or is based on an unconstitutional or otherwise unlawful provision, they may also directly address the Constitutional Court within a period of six weeks after the Federal Tax Court's decision. The appellant may request that the Constitutional Court refer the case to the Supreme Administrative Court, if the Constitutional Court holds that no constitutional rights of the taxpayer have been violated (this procedure is called 'successive legal appeal'). The Constitutional Court and Supreme Administrative Court may also be addressed simultaneously ('parallel judicial appeal').vii Suspension of execution of tax claims
An appeal against a decree by an Austrian tax authority does not have the effect of suspending the execution of such decree. The disputed amount, hence, must be paid, even if an appeal is filed. Together with the filing of the appeal, the taxpayer may apply for suspension of execution in whole or in part. A suspension of execution must be granted by the Austrian tax authorities (1) unless the appeal, from a reasonable perspective, appears to be almost certainly unsuccessful; (2) if and to the extent that the appealed decree does not deviate from the tax return or other requests made by the taxpayer; or (3) if the taxpayer's conduct does not indicate a risk with regard to the collection of the tax claim. If the appeal is finally unsuccessful, interest is chargeable for the period during which the payment of the Austrian tax was suspended. The interest rate is the base interest rate plus 2 percentage points (currently resulting in an interest rate of approximately 1.38 per cent). If, on the other hand, instead of applying for a suspension of execution, the taxpayer pays the Austrian tax when due and payable and, consequently, the taxpayer's appeal is successful, the taxpayer may in turn also claim interest (at the same rate) in respect of the amount paid.
Alternatively, the taxpayer may ask for a deferral of payment even before an appeal is filed. This might be of particular interest to the taxpayer if the taxpayer (for whatever reasons) cannot file the appeal in time and, therefore, has applied for and been granted an extension of the deadline for the filing of the appeal. Because a suspension of execution can only be applied for once an appeal has been filed, a deferral of payment may provide the necessary protection against an execution of the tax claim by the Austrian tax authorities. If a deferral of payment is granted, interest arises on the deferred payment at the rate of the base interest rate plus 4 percentage points (resulting in an interest rate of currently approximately 3.38 per cent) if the amount exceeds €750.