Austria MOF Clarifies Taxation of Unsecured Loans to Affiliate Company as Hidden Distribution of Profits

The Austrian Federal Ministry of Finance Oct. 7 posted online Federal Finance Court Decision No. RV/5100620/2023, clarifying the taxation of unsecured loans to an affiliate company as a hidden distribution of profits. The taxpayer, a company, granted unsecured loans to its affiliate company under the control of a joint shareholder and a managing director. The Tax Office assessed capital gains tax on the taxpayer, treating the loans as hidden profit distributions. The taxpayer argued that the arrangements were justified. On appeal, the Federal Finance Court held that: 1) the loans in 2017-2018 constituted hidden distributions because they weren’t at arm’s ...