Austria MOF Clarifies Deductions for Subcontractor Services Supported by Fraudulent Cover Invoices

The Austrian Federal Ministry of Finance Oct. 20 posted Federal Finance Court Decision No. RV/7106162/2019, clarifying the tax deduction rules for subcontractor services supported by fraudulent cover invoices. The taxpayer, a construction contractor, claimed business expense deductions for payments to a subcontractor and for-profit shares paid to a silent partner. Following an external audit, the Tax Office denied these claims due to the use of fictitious invoices, lack of credible records, and implausible cash transactions. On appeal, the Federal Finance Court found that: 1) tax deductibility depends on the true economic substance and credibility of transactions; 2) business expenses must ...