We have gathered feedback from the tax authorities of various key countries to find out the specifics about their APA programs. Read the following Q&A interview on the topic of APAs in Austria with Martin Schwaiger and Gerhard Steiner from the Austrian tax authority.
Q: What are, in your view, the main achievements of your APA program?
- To provide certainty for taxpayers.
- To gain knowledge in tax planning of taxpayers for tax administration.
Issues and challenges
Q: What are the main challenges facing your APA program?
- To provide APA’s in a timely manner given the shortage of personnel.
- To provide for an equal treatment of taxpayers.
- To detect BEPS structures in APA applications.
Q: Are there particular substantive issues (for instance, marketing intangibles or buy-ins for cost sharing arrangements, etc.) that have been more difficult to deal with?
A: No, however, the scope of the Austrian unilateral APA program is limited.
Q: Are there particular procedural issues (for instance, APAs involving more than two jurisdictions or APAs where prior years are under the mutual agreement procedure and these involve large proposed adjustments, etc.) that have been more difficult to deal with?
A: Multilateral APAs do pose difficulties regarding establishing a timely conclusion. Additionally, multilateral APA sometimes can be difficult if the result of the APA is put into legal force differently in the respective countries.
Q: Are there any other issues that you would like to bring to the attention of taxpayers as potentially difficult?
A: The Austrian unilateral APA system (“Auskunftsbescheid”) does not allow concluding contracts but the APA is a notice of assessment. This system is potentially difficult for foreign based Multi-National Enterprise (MNE) if they are not familiar with this legal system.
Q: From your experience, what are the main best practices that you would recommend that taxpayers adopt in requesting and filing for an APA?
- Enough time for a thorough pre-filing phase.
- Timetable in place.
Trends and outlook
Q: Based on your experience, have you noticed certain trends in any of the following topics:
- Type of transaction covered
A: Business restructurings.
- Transfer Pricing Methodology (TPM) proposed
- Reason of APA filing (difficult transfer pricing audits/examinations; desire for certainty; other)
A: Desire for certainty.
A: TNMM, with PLI cost +.
- Reason for APA filing (difficult transfer pricing audits/examinations; desire for certainty; other)
A: Desire for certainty.
Q: Looking to the future, what do you foresee for APAs?
- Do you see an increase vs. stability in terms of demand for APAs?
- APA staffing needs for tax authority
A: Yes, but unlikely to happen.