Accounting of dividend claims in the same financial year

The Austrian Supreme Administrative Court (VwGH), in its decision dated 11 November 2025 (Ro 2022/15/0014), has once again rejected recognition of dividend income at the parent company level in the same financial year where parent company and subsidiary have identical balance sheet dates.

Ruling of the VwGH

• In the present case, the parent company and its subsidiaries had a different financial year but the same balance sheet date – 30 September.
• In 2014, distributions from the subsidiaries were approved based on the unappropriated retained earnings shown in the financial statements as at 30 September 2013.
•  The parent company capitalised the profits distributed to it by its subsidiaries already at the balance sheet date (30 September 2013).
• Subsequently, the parent company also resolved to pay a special dividend in 2014 – based on its “increased” unappropriated retained earnings as at 30 September 2013 – to its shareholders. Without the accounting of the distribution in the same financial year, the parent company would not have had sufficient distributable unappropriated retained earnings to pay out the special dividend. Shortly after the distribution of the special dividend, the shareholders sold their shares in the parent company.
• The VwGH now (once again) ruled that the recognition of dividends in the same financial year is not permissible for Austrian tax purposes if both the parent company and the subsidiaries have identical balance sheet dates.
• As reasoning, the VwGH stated that where parent company and subsidiary share identical balance sheet dates, no sufficiently secured profit claim exists at the parent company level that would permit recognition for income tax purposes in the same financial year. Although, in principle, recognition of dividends in the same financial year is possible for corporate law purposes when the balance sheet dates are the same, the tax principle of “period-appropriate taxation” should override this in such cases.
•  Consequently, the VwGH denied the parent company the right to recognise the subsidiary’s profits already as at the balance sheet date 30 September 2013.
• From an isolated tax law perspective, the parent company therefore did not have sufficient distributable unappropriated retained earnings to fully distribute the special dividend. As a result, the special dividend paid by the parent company to its shareholders in 2014 was reclassified as a taxable capital gain to the extent of the dividends received from the subsidiaries. 

Capitalisation of dividend claims according to Austrian tax law

• Dividend claims against corporate entities may generally only be recognised once the distribution resolution has been resolved.
• In extremely rare exceptional cases, capitalisation may occur before the distribution resolution under certain conditions. If these conditions are met, a dividend receivable can also be capitalised for tax purposes at the shareholder level.
• According to the established jurisprudence of the VwGH, this is not permissible if the subsidiary and parent company have the same balance sheet date.
• For tax purposes, therefore, the dividend is not recognised in the same financial year as permissible under the Austrian Commercial Code (UGB), but only in the following financial year when the distribution resolution is passed.
• Particular caution should be exercised especially in transactions involving the sale of shares, as this may lead to adverse tax consequences. We are happy to assist you with the appropriate planning.

Authors: Michael Wenzl, Qian Hui Xu