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Austria – Transfer Pricing (2025)

The arm’s length principle is embedded in Austrian domestic law, primarily through Section 6 paragraph 6 of the Austrian Income Tax Act (ITA), which addresses transfers of assets (tangible or intangible) and services into and out of the country. It provides that assets transferred to a foreign permanent establishment (PE) or to the foreign business of the same taxpayer, as well as to other group entities, must be valued at the price that would be realized in an arm’s length sale between unrelated parties. This regime is complemented by provisions on hidden distributions and hidden contributions under Section 8 paragraphs 1 and 2 of the Austrian Corporate Income Tax Act (CITA), which prevent such operations from improperly reducing or increasing a corporation’s taxable profit. The Federal Fiscal Code (FFC), Sections 21 et seq., enshrines the substance over form principle and empowers tax authorities to disregard artificial legal forms and tax on the basis of the economically intended factual pattern.

Arm’s length principle and the role of the OECD Guidelines

Austria explicitly recognises the OECD Transfer Pricing Guidelines (OECD TPG) as the principal interpretative tool for the arm’s length principle and for Article 9 of the OECD Model Tax Convention. This role is referenced in Section 6 paragraph 6 of the ITA and explained in paragraph 19 of the Austrian Transfer Pricing Guidelines 2021 (Austrian TPG 2021). The Austrian TPG 2021 state that the OECD TPG, as amended from time to time, serve as the primary basis for treaty interpretation and are applied by analogy by the Austrian tax administration.

For the interpretation of “related parties”, Austria refers to Article 9 of the OECD Model Convention and supplements it with domestic criteria in Section 6 paragraph 6 of the ITA. Relevant criteria include common ownership of enterprises, in the case of partnerships the taxpayer being partner in both businesses, substantial shareholding in companies defined as more than 25%, and situations where the same persons manage, control or influence both enterprises. These thresholds and indicators trigger transfer pricing scrutiny under Austrian practice.

Methods and application criteria

Although domestic tax legislation does not list transfer pricing methods verbatim, Austria follows the OECD TPG and accepts the use of standard methods: Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM), Transactional Profit Split and other appropriate methods. The Austrian TPG 2021 (paragraphs 25 et seq.) mirror the OECD methodological guidance and adopt both the “most appropriate method” criterion and a hierarchy. Specifically, where a traditional transaction-based method (CUP, Resale Price, Cost Plus) and a transactional profit method are equally reliable, the traditional transaction method is preferred (see paragraphs 50 et seq.). For commodity transactions Austria follows the OECD guidance set out in paragraphs 2.18–2.22 of the OECD TPG.

Comparability and ranges

Austrian practice follows the comparability analysis guidance of Chapter III of the OECD TPG (Austrian TPG 2021, paragraphs 57 et seq.). There is no general preference for domestic comparables over foreign ones; selection depends on which delivers the most reliable data. The use of secret comparables is not permitted. If a selected method yields an arm’s length range, any price within that range will be accepted; statistical measures such as the interquartile range are accepted where they improve the reliability of the comparability analysis. If a controlled transaction falls outside the arm’s length range, adjustments by the tax administration can be made to a point within the range using measures of central tendency such as the median (paragraphs 76 et seq.). Comparability adjustments should be considered when they increase the reliability of the results (paragraph 71).

Documentation and reporting

Austria implements the three-tiered documentation approach consistent with BEPS Action 13. The domestic framework requires Master File, Local File and Country-by-Country (CbC) Report consistent with the Annexes to Chapter V of the OECD TPG. The Austrian Transfer Pricing Documentation Act (TPDA) sets a threshold for Master/Local File obligations: a Constituent Entity of an MNE Group must prepare such documentation if its revenues exceeded EUR 50 million in the two preceding fiscal years. Additionally, any Austrian constituent entity must produce a Master File upon request by the competent tax office if a constituent entity resident in another jurisdiction would be obligated to prepare a Master File under that jurisdiction’s rules. Timing-wise, Master File/Local File must be submitted to the competent tax office upon request within 30 days from the date of filing the corporate tax return or the tax return in which income is assessed. Documentation can be submitted in an official language permitted in tax proceedings or in English; however, general documentation is normally prepared in German and translations are only required as appropriate. If TPDA thresholds are not met, general documentation rules under the FFC apply and no specific TP filing obligation exists, meaning TP documentation must be prepared with the tax return and be available at the time of filing (Austrian TPG 2021, paragraphs 402 et seq., 407 and 414). The profile does not provide a specific domestic form for TP filings; therefore, No domestic guidance on specific filing forms is provided in the profile.

Penalties and compliance incentives

Record-keeping obligations are governed by Section 124 of the FFC. Failure to maintain required records may be prosecuted under Section 51 of the Austrian Financial Criminal Code (FinCC) and can attract fines up to EUR 5,000. For Country-by-Country reporting, Section 49b of the FinCC provides penalties for late, missing or incorrect filing: deliberate breaches can be fined up to EUR 50,000, and grossly negligent breaches up to EUR 25,000. The TPDA provides the exemption from Master/Local File obligations for entities not meeting the EUR 50 million threshold.

Safe harbours and simplification measures

Austria does not provide specific safe harbours or industry-wide simplification measures outside those integrated from the OECD guidance, and no domestic safe harbours are set out in the profile. The only exemption documented concerns the Master/Local File threshold noted above.

APAs and MAP; procedures and timing

Austria offers advance pricing agreements (APAs) including unilateral, bilateral and multilateral APAs, rulings, enhanced engagement/cooperative compliance programmes and participates in the International Compliance Assurance Programme (ICAP). The domestic procedural bases include Section 118 of the FFC and Sections 153a et seq. of the FFC. Austria utilises mutual agreement procedures (MAP) under its double tax conventions and implements EU dispute resolution mechanisms such as the EU Arbitration Convention and the Austrian EU Tax Dispute Resolution Act. Austria has published MAP guidance (2019) and maintains a MAP profile; however, the profile does not state uniform statutory time limits for APA or MAP processing and for detailed procedural timelines taxpayers should consult the Austrian MAP Guidance and the competent tax authority.

Secondary and corresponding adjustments; year-end adjustments

Austria permits downward corresponding adjustments even in the absence of a MAP where a foreign primary adjustment has been reviewed by the foreign competent authority and assessed as arm’s length. This approach is explained in paragraphs 502 et seq. of the Austrian TPG and relies on Section 6 para. 6 ITA in conjunction with Art. 9 DTA. A taxpayer requesting a corresponding adjustment must provide identification details, evidence supporting the foreign adjustment, a precise description of relevant facts, the taxable period, the relevant tax base and information on remedies and measures to prevent double non-taxation. An automatic corresponding adjustment is not permitted. Year-end adjustments are generally viewed as inconsistent with an ex ante pricing approach, but Austria accepts year-end adjustments if they reflect what independent parties would agree in comparable circumstances, particularly where pricing factors are pre-agreed and prices are monitored during the fiscal year (Austrian TPG 2021, paragraph 73). Secondary adjustments are recognised and typically take the shape of a constructive loan or receivable; in some cases they may be treated as a constructive dividend or contribution, with outbound constructive dividends generally subject to withholding tax unless treaty relief applies (paragraphs 507 et seq.).

Intangibles and HTVI

Austrian TPG 2021 address transfers and pricing of intangibles (chapter 1.3.4., paragraphs 137 et seq.) and explicitly incorporate the OECD guidance on Hard-to-Value Intangibles (HTVI) in chapter 1.3.4.4. (paragraphs 154 et seq.). Austria applies the OECD HTVI approach without additional domestic conditions beyond those in the OECD TPG. The general statute of limitations applies to HTVI cases: an absolute limitation period of 10 years from the taxable event. Taxpayers may request bilateral or multilateral APAs for HTVI-related transactions with no HTVI-specific restrictions. Austria applies paragraph 6.188 of the OECD TPG to avoid hindsight and includes HTVI approaches in auditor training to ensure proper application. In general, adjustments in open years for amounts pertaining to closed years are not permitted except to the extent overridden by an agreement under MAP; corresponding adjustments resulting from MAP agreements may therefore overcome domestic limitation periods.

Intra-group services and low-value-adding services approach

The Austrian TPG provides guidance on intra-group services consistent with Chapter VII of the OECD TPG (chapter 1.3.2., paragraphs 86 et seq.). A direct-charge method is generally favoured where services provided form a principal business activity and are supplied to both associated and independent parties. Indirect-charge methods may be appropriate where separate recording and analysis would impose a disproportionate administrative burden relative to the services. Austria has adopted the low value-adding intra-group services approach set out by the OECD without introducing quantitative thresholds in its administrative guidance. As practical orientation, a net profit margin between 3–10% may be used for routine services, following the EU Joint Transfer Pricing Forum report.

Financial transactions and interest deductibility limits

Austrian guidance on financial transactions follows Chapter X of the OECD TPG (Austrian TPG 2021, paragraphs 106 et seq.). The CITA contains additional rules on interest deductibility. Section 12 CITA and Section 12a CITA provide that intra-group interest payments to low-tax jurisdictions are non-deductible, interest on loans used to acquire group shares or to finance capital repayments is non-deductible, and Austria has implemented an interest limitation rule in line with the EU Anti-Tax Avoidance Directive (ATAD) which caps deduction of net interest expense at 30% of tax-relevant EBITDA. No specific thin capitalisation rules exist beyond these measures, and the classification of instruments as debt or equity is determined on an arm’s length basis.

Attribution of profits to permanent establishments

Austria follows the version of Article 7 of the OECD Model Convention as it read before 2010 in all of its treaties. For attribution of profits to PEs, Austria applies an “AOA light” consistent with paragraph references in the Austrian TPG (paragraphs 279 et seq.): a two-step analysis to (1) determine functions, assets and risks attributable to the PE and (2) determine the profits attributable to the PE by pricing dealings between the PE and the rest of the enterprise on an arm’s length basis using OECD TPG by analogy. Austria recognises dealings only insofar as they are compatible with the wording of Article 7 prior to the 2010 update (2008 version); consequently, internal interest, royalty and rental payments are generally not recognized. Austria also permits the indirect method of attribution in line with Article 7(4) as it read before 2010.

Conclusion

The Austrian transfer pricing framework is closely aligned with the OECD Transfer Pricing Guidelines and is reflected both in domestic law (Sección 6 para. 6 ITA; Sección 8 CITA; reglas del FFC) and in the Austrian Transfer Pricing Guidelines 2021. Austria provides comprehensive administrative guidance on methods, comparability, intangibles, HTVI, intra-group services, financial transactions and documentation. The TPDA introduces concrete thresholds for documentation obligations (EUR 50 million turnover threshold for Master/Local File) and sanctions for non-compliance are set out in the FFC and FinCC. For highly specific procedural matters such as exact APA or MAP processing timelines and specific domestic filing forms, No domestic guidance on specific filing forms or uniform APA/MAP timing is provided in the profile and taxpayers should consult the Austrian tax administration guidance and the Austrian TPG 2021, as well as the OECD TPG where relevant.

References

More information and country profiles are available on the OECD website: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html

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