New Austrian Transfer Pricing Guidelines 2021 – lowering the threshold for PEs


On October 7, 2021 the Austrian Ministry of Finance published the final version of the Austrian Transfer Pricing Guidelines 2021 (ATPG 2021). The ATPG 2021 reflect the opinion of the Austrian authorities on the interpretation of the statutory provisions. This update- alongside others (separate newsletter to follow) also includes some further clarifications regarding the creation of a permanent establishment for CIT purposes (PE) in Austria.

1. Following the “painter example”

Since 2003, the so-called “painter example” has been included in the OECD Model Commentary, which states that a de-facto power of disposal over a fixed place of business is sufficient for the establishment of a PE. Accordingly, a painter who carries out painting work three times a week for two years at his main client’s premises establishes a PE through his regular permanent presence in the building. In 2017, the Austrian tax authorities initially indicated their tendency to follow this painter example, which has now been included in the ATPG 2021.

2. Flexible workspace in an open-plan office is sufficient for an Austrian PE 

In the ATPG 2021, the Austrian tax authorities have highlighted that a PE can be created not only by a fixed workspace in an open-plan office, but also by a flexible workspace in an open-plan office (assuming that the other prerequisites for a PE are fulfilled).

3. Criteria for a home office PE

  • Core business activities of the employer are performed at the employee’s home (thereby providing the employer with de facto power of disposal over the home office)
  • Work activities are carried out from home in consultation with the employer
  • Sufficient degree of permanence (the activities are not merely occasional)

According to ATPG 2021, the use of the home office "in consultation with the employer" is one criterion for the tax authorities to establish a home office PE. In practice, any agreement – oral or written – in this sense may already convey a power of disposal over the home of the employee. By contrast, the OECD Model Commentary only assumes the power of disposal if the employer requires the employee to work from home (e.g. by not providing the employee with a workspace even though the nature of the employee’s activities requires one). It therefore remains to be seen how the Austrian tax authorities will take this into account.

The ATPG 2021 state that activities at home of less than 25% of the overall working time, for example one day per week, should be seen as occasional. Activities that take up more than 50% of overall working time, on the other hand, no longer fall under merely occasional use. The question of how to deal with home office activities between 25-50% remains unanswered in the ATPG 2021.

4. Dependent agent PE

The ATPG 2021 also clarifies that corporate officeholders (e.g. a managing director) are able to establish a dependent agent PE in Austria.

Authors: Nikola Breinhölder & Marlies Ursprung-Steindl

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