Insights
TAX & BUSINESS
Information notice from the tax administration
The information notice gives companies and taxpayers the opportunity to have tax questions on not yet realised facts clarified in advance by the tax administration.
A Dutch company had applied for an information notice in order to clarify tax questions with the tax office regarding a planned conversion. The plan was to convert a GmbH into a cooperative, with the GmbH owning real‑estate assets in Austria. The central question was whether this conversion was subject to real estate transfer tax (Grunderwerbsteuer) or not.
The application concerned exclusively the question of real estate transfer tax, but the tax office expanded the information notice to include an income‑tax assessment that was not covered by the application. The company lodged an appeal, arguing that the information notice was unlawful with respect to the income‑tax aspects. It contended that this point had not been addressed in the application and therefore should not have been considered in the notice.
Decision of the Federal Fiscal Court (Bundesfinanzgericht, BFG)
The Federal Fiscal Court upheld the appeal and ruled that the information notice is a “application‑required administrative act” and that the authority may only address the specifically formulated legal questions in the application. Any assessment beyond that constitutes an unlawful extension of the scope of the application. Otherwise the taxpayer would be forced to lodge a legal remedy to prevent an excessive information notice.
The judgment makes clear that the assessment of the income‑tax aspects is not automatically part of an application for an information notice if they have not been expressly requested. The company was only interested in clarifying the real estate transfer tax liability, not in an income‑tax evaluation.
Conclusion
In summary, the decision shows how important it is to pose precise legal questions in the application. An expansion of the application in later appeal proceedings is not permitted and the authorities are bound by the questions set out in the application. Taxpayers should therefore consider carefully which legal issues they wish to clarify in advance, as these define the scope of the information notice.
The application concerned exclusively the question of real estate transfer tax, but the tax office expanded the information notice to include an income‑tax assessment that was not covered by the application. The company lodged an appeal, arguing that the information notice was unlawful with respect to the income‑tax aspects. It contended that this point had not been addressed in the application and therefore should not have been considered in the notice.
Decision of the Federal Fiscal Court (Bundesfinanzgericht, BFG)
The Federal Fiscal Court upheld the appeal and ruled that the information notice is a “application‑required administrative act” and that the authority may only address the specifically formulated legal questions in the application. Any assessment beyond that constitutes an unlawful extension of the scope of the application. Otherwise the taxpayer would be forced to lodge a legal remedy to prevent an excessive information notice.
The judgment makes clear that the assessment of the income‑tax aspects is not automatically part of an application for an information notice if they have not been expressly requested. The company was only interested in clarifying the real estate transfer tax liability, not in an income‑tax evaluation.
Conclusion
In summary, the decision shows how important it is to pose precise legal questions in the application. An expansion of the application in later appeal proceedings is not permitted and the authorities are bound by the questions set out in the application. Taxpayers should therefore consider carefully which legal issues they wish to clarify in advance, as these define the scope of the information notice.