Austria Must Change Rules On Fiscal Representatives

by Ulrika Lomas, Tax-News.com, Brussels

19 May 2009

The European Commission has formally requested Austria to change its tax provisions related to the appointment of a fiscal representative.

According to the EC, rules which request foreign investment funds, real estate funds and credit institutions to appoint an Austrian fiscal representative result in discriminatory treatment and are “incompatible with the freedom to provide services.”

The request takes the form of a ‘reasoned opinion,’ the second stage of infringement proceedings under the European Treaty. The Austrian government now has two months to provide the EC with a “satisfactory” response or face referral to the European Court of Justice.

According to the EC, this case concerns two aspects of the Austrian rules in respect of the appointment of a fiscal representative.

Under Austrian rules, domestic credit institutions managing domestic investment funds or real estate funds are exempted from the requirement to appoint a fiscal representative. By contrast, foreign investment funds and real estate funds must always appoint a fiscal representative when carrying out operations in Austria. Moreover, foreign credit institutions managing domestic investment funds or real estate funds must also appoint a fiscal representative.

In addition, Austrian rules introduce a discrimination against foreign credit institutions and foreign certified public accountants. Only a domestic credit institution or domestic certified public accountant can be appointed as a fiscal representative for investors in an investment fund or real estate fund. “This constitutes direct discrimination based on the place of establishment of the service provider,” the Commission argues.

“The Commission is of the opinion that Austria has in both cases failed to fulfil its obligations under Article 49 of the EC Treaty and Article 36 of the EEA Agreement, i.e. the freedom to provide services,” the EC stated.

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