COVID-19 Legal Update: Effects of COVID-19 – Tax relief

20 March 2020 – need2know

In the light of COVID 19 developments, various tax measures are intended to provide support in the event of liquidity bottlenecks.  Furthermore, time limits are to be extended.

The Federal Ministry of Finance published special regulations concerning the SARS CoV-2 virus (coronavirus) in its decree of 14 March 2020, BMF – IV (IV), GZ.2020-0.178.784 (“decree”). Upon application and if the taxpayer can credibly demonstrate that there are liquidity bottlenecks due to the COVID 19 pandemic, the tax authorities are to allow subsequent tax relief as unbureaucratically and quickly as possible. Furthermore, the Federal Ministry of Finance has recently published information on the suspension of fees, the extension of deadlines and the tax exemption for coronavirus assistance on its homepage.

1. Advance payments of income and corporation tax

1.1 Reduction of advance payments

In order to improve liquidity, companies can apply for a reduction in advance payments of income or corporate tax for the calendar year 2020, until 31 October, 2020. In the application, the taxpayer must substantiate the expected reduction of the tax base on the basis of the specific circumstances. Applications for the reduction of advance payments of income and corporate income tax must be processed immediately.

If there is no taxable proit for the calendar year 2020, the tax office must set the advance payments for the calendar year 2020 at zero euros.

1.2 Non-determination of advance payments of income and corporation tax

Unless income or corporate tax advance payments for the calendar year 2020 are set at zero euros, the advance payment shall be reduced to the amount that is expected to be paid for the calendar year 2020. If the taxpayer is so affected in terms of liquidity by the consequences of the emergency caused by the coronavirus that it is not possible to make the advance payment in the amount to be determined, the following options are available: The taxpayer may suggest to the tax office to refrain from fixing income tax or corporate income tax advance payments for the calendar year 2020 in their entirety or to limit the fixing to such an amount that is lower than the expected annual tax.

The tax office must accordingly set the amount of the income tax or corporate tax advance payment at a lower amount or at zero euros pursuant to § 206 para. 1 lit a BAO. The prerequisite is that the taxpayer must credibly demonstrate that he is actually affected by the consequences of a liquidity emergency caused by the coronavirus.

In accordance with § 206 para. 2 BAO, the tax claim does not expire if the taxpayer refrains from fixing the amount. The waiver does not affect the authority’s ability to assert personal liability in this respect vis-à-vis liable parties.

1.3 Non-determination of claim interest

If an income or corporate tax assessment for 2020 results in an additional claim, interest will generally be charged on such additional claims. According to the decree, however, the tax office must, ex officio, refrain from setting claim interest for affected companies on the basis of § 206 para. 1 lit a BAO.

2. Payment facilities

2.1 Deferral and payment by installments

Taxable persons may request  to (i) defer the date of payment of a tax (deferral) or (ii) make payment of the tax in installments. Taxpayers may also, in the application for deferral or payment by installments, suggest that they refrain from charging deferral interest.

In the respective application, the taxpayer’s concrete concern must be substantiated. When processing the application, the tax office must, within the framework of its exercise of discretion, take into account the special situation that has arisen in an individual case due to the occurrence of the coronavirus.

2.2 Non-fixing or reduction of late payment penalties

A late payment surcharge is normally payable for a tax debt not paid by the due date. The companies concerned can have this surcharge reduced or request the waiver of interest. Taxpayers can apply to the tax authorities to reduce or waive a late payment surcharge. Here too, the application must substantiate that the taxpayer is actually affected. When dealing with the taxpayer’s application for a reduction or non-determination of a late payment surcharge, the tax office must assume that there is no gross negligence in the delay if the taxpayer’s concrete involvement has been substantiated.

3. Prima facie evidence

In all cases, the application of the above-mentioned measures (concerning advance payments of income and corporate tax and payment facilities) is conditional on taxpayers being able to demonstrate that they are affected by a liquidity squeeze that is specifically due to a coronavirus infection.

The following examples are given in the decree:

  • failure or impairment of supply chains
  • loss or impairment due to loss of income from changes in consumer behaviour
  • exceptionally high cancellations of hotel reservations
  • cancellation of sports and cultural events due to official prohibitions

The decree contains short text proposals for the substantiation.

You can find the decree from the BMF here:

A combined sample application from the BMF can be found here:

4. Further measures

4.1 Extension of time limits

According to current information from the Federal Ministry of Finance, important deadlines are interrupted in tax and financial criminal proceedings. This includes the course of appeal, objection, submission of an application for a preliminary ruling, appeal against measures, as well as the annual deadlines for cancellation upon application which were still open on 16 March 2020 or which began between 16 March and 30 April. These deadlines are to start running again on 1 May 2020.

4.2 Tax exemption for coronavirus aid

Contributions to overcome the Coronavirus crisis are tax-free. However, the expenses covered by these grants will remain operating expenses in their entirety.

4.3 Suspension of fees

The aim is to ensure that no fees are charged for applying for assistance. With the amendment of the Law on Fees, there will be a comprehensive exemption from fees, and charges for all writings and official acts in connection with the Coronavirus support measures will be created.

Authors: Gerald Schachner, Kornelia Wittmann

Please contact us if you have any questions:
Gerald Schachner
Kornelia Wittmann
Nicolas Wolski
Roland Juill
Lucas Hora

Practice group:

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