Austria MOF Clarifies Capital Gains Taxation of Hidden Profit Distributions

The Austrian Federal Ministry of Finance Feb. 4 posted Federal Finance Court Decision No. RV/6100631/2017, clarifying the capital gains taxation of hidden profit distributions. The taxpayer, a construction-sector company, underwent an audit that revealed the use of unrecognized external service invoices and unregistered labor. The Tax Office treated the difference between the fictitious third-party service expenses and personnel expenses as hidden distributions and issued liability notices for capital gains tax. On appeal, the Federal Finance Court dismissed the appeal as unfounded, finding that: 1) all the requirements for a hidden distribution were met; 2) the subcontractor invoices were fictitious and ...