Austria MOF Clarifies Taxation of Business Asset Sales to Related Parties as Hidden Profit Distributions

The Austrian Federal Ministry of Finance Oct. 6 posted online Federal Finance Court Decision No. RV/1100128/2019, clarifying the taxation of business asset sales to related parties as a hidden distribution of profits. The taxpayer, a company operating a grocery store, sold a branch to the sister of one of its shareholders at a price significantly below the arm’s length value. The Tax Office assessed capital gains tax on the difference, treating it as a hidden distribution. The taxpayer argued that the transaction wasn’t a hidden profit distribution. On appeal, the Federal Finance Court found that: 1) the sale constituted a ...