Tax – Legal

Please outline the work your firm does and the ways in which you distinguish yourself in the provision of tax advice. Perhaps provide a recent case study demonstrating your expertise.

WOLF THEISS is an Austrian law firm with offices in 13 countries in Central and Eastern Europe (CEE). While our bread-and-butter business definitely encompasses M&A, real estate and finance transactions, we also do tax and private client work, which is my own area. In one case we are currently dealing with, we are advising several non-Austrian pension funds who are in the process of acquiring Austrian real estate and for whom we have prepared a tax ruling request. In another case, we are advising a high-net-worth individual moving from Eastern Europe to Austria and for whom we are analyzing various trust and holding structures of his prior to immigration, lest there be any tax obstacles.

Please write a few lines about your experience in the legal profession and the area that you are profiling (tax law) in particular. This can include your professional memberships, publications, awards, etc.

I am the head of the firm-wide tax team of WOLF THEISS, am admitted as both a lawyer and a tax advisor and have degrees in business (from the Vienna University of Economics and Business) and in law (from the University of Vienna) and a doctorate in law (from the University of Vienna). For many years, I have had #1 rankings by Chambers and Legal 500. I am currently also the chair of the Private Client Tax Committee of the International Bar Association (IBA). In this capacity I helped to organize a high-profile private client conference in London in March (virtually a week before Europe shut down due to COVID-19). I do a lot of publishing (for example, a book on crypto assets and blockchains last year) and am an active user on LinkedIn.

Please briefly describe your jurisdiction’s corporate tax regime, and any unique aspects that make it stand out.

Austrian resident corporations are subject to corporate income tax: A flat tax rate of 25% applies, with no additional state, provincial or local tax being levied. There is a minimum amount of corporate income tax payable (in general EUR 1,750 p.a.). The tax base is generally the profit as shown in the financial statements; however, where mandatory tax provisions deviate from financial accounting rules, adjustments have to be made. Capital gains and losses are treated the same as regular income. As a general rule, expenses incurred in acquiring, securing and maintaining taxable income are tax-deductible. The tax year is generally the calendar year; it is, however, possible to apply to the tax authorities for permission to use a different tax year. Corporate income tax returns have to be filed, on the basis of which corporate income tax is assessed by the tax authorities. Quarterly prepayments of tax must be made.

What tax difficulties are commonly encountered in your jurisdiction and how does your firm help to resolve them?

The tax laws are getting more and more complex, and it is difficult to interpret the rules. Thus, clients often need advisors to understand the tax obligations they are facing. Also, often clients inadvertently make mistakes. Our firm regularly assists clients in filing voluntary disclosures, which typically help a client to avoid penalties for non-compliance.

From a tax perspective, to what extent is your jurisdiction an attractive location for foreign investment (ie, what useful tax treaties and tax advantages are in place)? How much interest have you seen from acquirers/investors outside the country in recent years?

Austria is indeed an attractive location for doing business: we are in the heart of Europe, have a qualified workforce, excellent infrastructure, stable government institutions, a rather good tax system and administration, many double taxation treaties, an interesting research & development tax incentive, a liberal group taxation system and the possibility to get tax rulings. In the last decades, many multinationals have for these reasons moved their regional headquarters to Vienna.

During the past decade, there has been increased media attention on the issue of tax evasion. What are your opinions on efforts to strengthen tax regulation, avoid loopholes, and the crackdown on tax havens? Has this led to any interesting cases studies, especially those that proved complex or challenging, that you could share with our readership?

The global attacks on tax planning have made our work and our clients’ lives more complicated. We currently don’t have a level playing field anymore; it seems as if the balance of power has dramatically shifted in favour of the tax authorities.

How did you have to adapt your work methods in light of COVID-19, in order to maintain your existing client relationships?

Obviously, COVID-19 meant that we now have fewer physical client meetings and fewer tax conferences. I think we have grown comfortable using Zoom and other similar solutions.

What does your current workflow look like? and what are some of the tax-related concerns that clients are bringing to your attention as a result of the pandemic? If possible, please provide a recent case study demonstrating your service offering in emergency management

We had a bit of slowdown in March, but are again fully up to speed. An interesting COVID-19-related case we had concerned the leasing of a sanatorium to a public body, which temporarily used the facility as an emergency hospital.

COVID-19 has impacted the current tax guidelines (and deadlines), such as changes to due dates relating to tax returns for the self-employed. What unique opportunities has this opened up?

Most of the COVID-19-related tax legislation is boring and just deals with filing deadlines being postponed or interest payments being waived. There are, however, also some international tax-related topics that are interesting, e.g., when individuals are stuck in quarantine in a foreign country and risk becoming tax residents there, or when employees work from home and possibly thereby create a tax liability for their employers.

How do you ensure a well-informed advisory scope for clients who are based in other jurisdictions, or have operations based overseas? For example, are you especially active in network events such as conferences wherein information is exchanged among member firms?

We publish a lot of material for clients on our website, in tax journals, in books and on social media. Also, we do regular webinars and conferences for clients. I am currently planning a three-day workshop on crypto assets, dealing with tech, economics, legal and tax issues.

About Niklas

Dr. Niklas J.R.M. Schmidt heads the firm-wide tax team. He is admitted both as a lawyer and as a tax adviser. Before joining the firm in 2000, Niklas worked for several years at a “Big Four” accounting firm and as a research assistant in the tax law department at the University of Vienna. Niklas is frequently engaged as a speaker at international tax conferences and has been a visiting lecturer at various universities in Austria and abroad. He has written several books and many articles in international tax journals. Currently, Niklas is a member of the advisory board of the Digital Asset Association Austria (DAAA) and sits on the editorial board of the Austrian “SteuerExpress” magazine. Furthermore, Niklas is a member of several international organisations (often in leadership positions), including the International Bar Association (IBA), the Society of Trust and Estate Practitioners (STEP) and the International Fiscal Association (IFA). Niklas is the immediate past chair of the IBA’s Private Client Tax Committee and in this capacity has been instrumental in organising various conferences. In the field of tax, Niklas deals with a wide range of corporate and private client tax matters. Niklas has particular technical expertise in the area of crypto assets and blockchains, is the author of a German language book on this topic and a co-editor of the leading English language book covering crypto taxation in more than 40 countries. Niklas regularly lectures on crypto assets and is the founder of the WT Crypto Academy.