The end of the year is approaching fast and, for some large corporate groups, with it the first deadline related to the Austrian Minimum Tax Act, which has entered into force at the beginning of 2024: The appointment of an Austrian entity as the Pillar Two taxpayer.
Global minimum taxation (Pillar Two) requires not only extensive calculations, but also adherence to several compliance obligations (in particular the submission of a GloBE information return or respectively a corresponding notification to the Austrian tax authorities, an advance notification of any top-up tax etc). As the relevant deadlines are not due until 2026, many groups consider the compliance regulations still a long way off. However, this is not entirely correct: There may already be a need for action from a tax compliance perspective in Austria until the end of 2024.
The Austrian Minimum Tax Act (MTA) applies to all Austrian-based entities of a group with more than EUR 750 million in consolidated revenue. Even though the top-up tax, based on Austrian regulations, is to be calculated for all Austrian entities together, the Pillar Two tax liability is concentrated on one single Austrian constituent entity (regardless of whether it concerns the IIR (Income Inclusion Rule), the UTPR (Undertaxed Payment Rule) or the QDMTT (Qualified Domestic Minimum Top-up Tax). For joint venture groups, there is a separate Pillar Two taxpayer.
The Pillar Two taxpayer is the Austrian constituent entity that is
Thus, following the law, the UPE has the primary right to appoint a specific local constituent entity as the Pillar Two taxpayer. If the UPE does not make such an appointment, the top Austrian entity in the group structure is automatically considered as the Pillar Two taxpayer. The ultimate entity is the constituent entity that holds interests in all other constituent entities of the group located in Austria and in which no other constituent entity in Austria holds an interest. If there is no such top entity in Austria, the economically most significant constituent entity is automatically considered to be the Pillar Two taxpayer.
The Pillar Two taxpayer is the only entity in Austria required to submit an advance notification and pay any top-up tax.
There are no specific formal requirements for such an appointment. A letter of intent signed by a representative of the UPE is sufficient. According to official information from the Austrian tax office, this letter of intent may be as follows:
Such an appointment can be made by a body authorized to represent the UPE or by a representative of the UPE responsible for tax matters (e.g. group tax department). There is no need to provide any evidence of such authority. An appointment in the English language is also deemed sufficient.
Mentioned proof of appointment needs to be uploaded at the level of the appointed Austrian constituent entity in PDF format in FinanzOnline. A specific input mask for uploading such proof has recently been made available.
Such an appointment also holds for subsequent periods unless a withdrawal has been submitted.
We will be happy to assist you in assessing whether there is a need for action in your specific case.
Global minimum taxation (Pillar Two) requires not only extensive calculations, but also adherence to several compliance obligations (in particular the submission of a GloBE information return or respectively a corresponding notification to the Austrian tax authorities, an advance notification of any top-up tax etc). As the relevant deadlines are not due until 2026, many groups consider the compliance regulations still a long way off. However, this is not entirely correct: There may already be a need for action from a tax compliance perspective in Austria until the end of 2024.
The Austrian Minimum Tax Act (MTA) applies to all Austrian-based entities of a group with more than EUR 750 million in consolidated revenue. Even though the top-up tax, based on Austrian regulations, is to be calculated for all Austrian entities together, the Pillar Two tax liability is concentrated on one single Austrian constituent entity (regardless of whether it concerns the IIR (Income Inclusion Rule), the UTPR (Undertaxed Payment Rule) or the QDMTT (Qualified Domestic Minimum Top-up Tax). For joint venture groups, there is a separate Pillar Two taxpayer.
Determination of the Pillar Two taxpayer
Section 76 para. 2 MTA defines a sequence of tests to determine the Austrian Pillar Two taxpayer:The Pillar Two taxpayer is the Austrian constituent entity that is
- appointed by the Ultimate Parent Entity (UPE) or,
- if no appointment has been made, the top constituent entity (in the group structure) located in Austria or,
- if there has not been an appointment of a specific entity and there is no top constituent entity in Austria (this would be the case, for example, with Austrian sister companies), the economically most significant constituent entity located in Austria (to determine this, the focus of the company's activities, the amount of revenue, information from the company register, the GloBE information return and the CbC report must be taken into account).
Thus, following the law, the UPE has the primary right to appoint a specific local constituent entity as the Pillar Two taxpayer. If the UPE does not make such an appointment, the top Austrian entity in the group structure is automatically considered as the Pillar Two taxpayer. The ultimate entity is the constituent entity that holds interests in all other constituent entities of the group located in Austria and in which no other constituent entity in Austria holds an interest. If there is no such top entity in Austria, the economically most significant constituent entity is automatically considered to be the Pillar Two taxpayer.
The Pillar Two taxpayer is the only entity in Austria required to submit an advance notification and pay any top-up tax.
Appointment of the Pillar Two taxpayer
The UPE may appoint any entity located in Austria to act as the Pillar Two taxpayer. For regular fiscal years, the proof of such an appointment must be provided to the Austrian tax office by December 31st 2024. In the case of deviating financial years, there is still time to provide this proof until the end of 2025.There are no specific formal requirements for such an appointment. A letter of intent signed by a representative of the UPE is sufficient. According to official information from the Austrian tax office, this letter of intent may be as follows:
“We hereby appoint the constituent entity XY as the Pillar Two taxpayer within the meaning of Section 76 para. 2 MTA.“
Such an appointment can be made by a body authorized to represent the UPE or by a representative of the UPE responsible for tax matters (e.g. group tax department). There is no need to provide any evidence of such authority. An appointment in the English language is also deemed sufficient.
Mentioned proof of appointment needs to be uploaded at the level of the appointed Austrian constituent entity in PDF format in FinanzOnline. A specific input mask for uploading such proof has recently been made available.
Such an appointment also holds for subsequent periods unless a withdrawal has been submitted.
We will be happy to assist you in assessing whether there is a need for action in your specific case.
Author:
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Christina Höchtl |
