Austria I Shines Spotlight on New Criminal Liability for VAT Law Infringements

Austria has recently published draft legislation on fighting tax fraud.

Introduction of criminal cross-border VAT fraud offence

Austria has recently published draft legislation on fighting tax fraud.  The proposals relating to VAT introduce a new provision creating a criminal liability for cross-border VAT fraud. This provision would apply to fraud resulting in at least EUR 10 million of damage as a result of:

  • Use or presentation of false, incorrect or incomplete VAT-related statements or documents;
  • Non-disclosure of VAT-related information in violation of a specific obligation; or
  • Presentation of correct VAT-related statements for the purposes of fraudulently disguising the non-payment or wrongful creation of rights to VAT refunds.

Sanctions are set at between one to ten years’ imprisonment and fines of up to EUR 2.5 million.

Court decides criminal risk of tax evasion for missed input VAT adjustments

The Austrian Federal Finance Court has decided that a taxpayer may be held to have committed tax evasion (a criminal offence), if his tax adjustments of input VAT are made in an incorrect pre-notification period. The court explained that there is a justified suspicion of tax evasion if the taxpayer did not act according to the tax advice he had received.

Next steps

The draft bill is now at appraisal stage. If enacted, businesses need to make sure they are aware of   what constitutes such a breach and what the penalties are. Sanctions for criminal offenses are more severe than for civil infringements.

The court decision reinforces the importance of following correct compliance procedures and of course.  Contact our VAT experts now and find out how these developments could affect your business.