TAX HUB

In the past two years we have seen events that have changed the way we work, and more importantly from an indirect tax point of view, the way we purchase and receive goods and services as consumers. As a result, Value Added Tax (VAT) and Goods and Services Tax (GST) is growing in its complexity and application, as the traditional goods and services model is replaced with digital content; virtual consumption and seamless international trade flows.

Due to the current situation in Ukraine, a number of companies have recently organized or made donations in cash or in kind for the long-suffering people on the ground. The wave of solidarity and willingness to help is enormous. The provision of these cash and non-cash assets can be claimed as tax-deductible under consideration of the legal requirements. The following is a brief explanation of the requirements that must be met in this regard.

If the employee has the option of using a company-owned electric vehicle (with a CO2 emission value of zero grams per kilometer) for private travel, a non-monetary remuneration value of zero is to be applied. An electric vehicle is a means of transport that is powered purely by electric energy.

During a prolonged financial crisis, such as the one triggered in 2008-09 by the collapse of the US sub-prime market and the current period of uncertainty caused by Covid-19, tax revenues tend to decline significantly.

In April 2021, around 200 leaders from businesses and tax authorities around the world joined experts from the OECD and Grant Thornton to explore the transfer pricing issues thrown up by COVID-19. The level of interest from countries as far apart as Argentina and New Zealand attests to the deep uncertainties over transfer pricing and resulting concerns over the potential for double taxation and dispute.

Reforms to the international tax framework have been debated and discussed at length in recent years.

The imposed entry bans to contain the Corona pandemic have turned the work organization of many businesses upside down from one day to the next. Since the outbreak of the pandemic, work could no longer be performed on site in many industries. Some companies therefore (forced) to switch to home offices.

Draft law on the restructuring of companies has become necessary because Austria also has to comply with the implementation of an EU directive for pre-insolvency proceedings (by July 2021).

In the course of the Corona Pandemic, insolvency law was alcorona, covid-19so adapted to support companies that went into financial difficulties as a result of COVID-19.

The Austrian Federal Ministry of Finance has updated the income tax guidelines regarding the taxation of foreign employers without a permanent establishment, which changes last year’s amendment and aligns it to the legal situation before January 2020. A permanent establishment for payroll purposes is defined as any fixed local facility or establishment maintained by the employer in the country for a period of more than one month, if it serves to carry out the activity performed by the employee.

In an information letter (GZ 2020-0.457.789 dated 20.07.2020), the Federal Ministry of Finance (BMF) answered further detailed questions on the temporary introduction of the reduced VAT rate of 5% from 1 July 2020 in the restaurant, hotel, cultural and publication sectors.

The temporary introduction of a 5 % VAT rate for areas particularly affected by COVID-19 was unanimously approved by the National Council on Tuesday, 30 June 2020. An amendment - also adopted unanimously - also clarified and extended the areas benefiting.

In order to support the areas of gastronomy, culture and publications, which are particularly affected by COVID-19, an initiative motion on the temporary introduction of a reduced VAT rate of 5% was submitted to the National Council on 18 June 2020. The National Council is expected to pass a resolution on this on 30 June 2020 and the Federal Council on 2 July 2020. We have compiled some information on this subject. (Status: 24.06.2020)

In order to cushion the economic impact of the Corona pandemic, reorganization under insolvency proceedings will be facilitated. In any case, the affected companies will have longer in 2021 to implement their reorganization plans.

The health crisis brought by the COVID-19 virus has suddenly paralyzed many sectors of the economies in CEE. The impact will be long-lasting. In these times, our clients need support and guidance across their business, however the immediate priority is to manage short to mid-term cash and liquidity needs. The adage that cash is king needs to be communicated not only to the finance departments but also across all business units.