at-transfer-pricing

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# Austrian transfer pricing (Verrechnungspreise): tax year 2026

Austria has no single transfer pricing section. The arm's length rule comes from § 6 Z 6 EStG (applied to companies through the KStG) and from Article 9 of each tax treaty. A price that favours a shareholder is also a hidden distribution under § 8(2) KStG, which brings in KESt. The documentation rules sit in the Verrechnungspreisdokumentationsgesetz (VPDG, BGBl. I Nr. 77/2016) and its regulation (VPDG-DV), on top of the general bookkeeping duties in §§ 124 and 131 BAO. The Ministry of Finance explains how it applies all of this in the Verrechnungspreisrichtlinien 2021 (VPR 2021, BMF-AV Nr. 140/2021), updated by the maintenance decree of 11 March 2025 (BMF-AV Nr. 33/2025) for the OECD Transfer Pricing Guidelines 2022. The VPR are the ministry's summary of the rules for the tax offices and for businesses; no rights or duties beyond the law can be drawn from them (VPR 2021, introduction).

What is new for 2026: nothing in the arm's length rule or the VPDG thresholds. Annex 2 of the VPDG (the country-by-country entity list) was amended by BGBl. I Nr. 96/2025 with effect from 1 January 2026 (§ 15(3) VPDG). Already enacted for later years by BGBl. I Nr. 62/2026: a clearing-account receivable over EUR 50,000 against an individual shareholder that is not settled by the balance sheet date counts as an open distribution, from financial years ending in 2027 (KStG § 8(2a) and § 26c Z 101); and a 24% corporate rate on income above EUR 1,000,000, for financial years starting after 31 December 2027 (KStG § 22(1) and § 26c Z 102). Neither applies to 2026.

Related skills: `at-corporate-income-tax` (the 23% rate, the taxable base, the K 1 return and its 30 June deadline, the minimum tax, the dividend exemptions), `at-cross-border` (residence, exit tax under § 6 Z 6 lit. a to e EStG, withholding on outbound payments, late-payment surcharges and Anspruchszinsen), `at-vat-return`. This skill does not repeat them.

## Who this applies to

**The arm's length rule (§ 6 Z 6 lit. a EStG).** It applies when goods or services move between an Austrian business and a foreign business and the two are linked in one of these ways: the foreign business belongs to the same taxpayer; the taxpayer is a partner (Mitunternehmer) in either business; the taxpayer holds more than 25% of the foreign company or the foreign company holds more than 25% of the taxpayer; or the same persons manage or control both, or have influence over them. The values are those that would have been set with a fully independent business. The last sentence of lit. a applies the rule to services ("sonstige Leistungen") as well as goods. The VPR treat § 6 Z 6 EStG as the domestic basis for raising profits under Article 9 of a treaty and read it in line with the OECD Transfer Pricing Guidelines, as they change over time (VPR 2021 Rz 14 and 15). It covers financing as well as deliveries, but not private (non-business) dealings (Rz 14).

**Hidden distributions (§ 8(2) KStG).** A company's income is the same whether it is paid out openly, through a hidden distribution, or used in another way. A price that gives a shareholder, or a person close to the shareholder, an advantage at the company's expense is added back to the company's income. This also reaches domestic dealings, where § 6 Z 6 EStG does not apply. The VPR test is: an ownership or close relationship, an objective enrichment of the shareholder at the company's cost, and a decision aimed at giving that advantage (VPR 2021 Rz 514, citing KStR 2013 Rz 568). The opposite flow, an advantage from a parent to its subsidiary, is a hidden contribution (verdeckte Einlage) in the subsidiary (Rz 520).

**Permanent establishments.** Profits between a head office and its permanent establishment are allocated at arm's length under Article 7 of the treaties, following the authorised OECD approach only so far as the pre-2010 wording of Article 7 allows ("AOA light", VPR 2021 Rz 9 and 10).

**Documentation under the VPDG.** A business unit (Geschäftseinheit) resident in Austria that belongs to a multinational group, meaning two or more units resident in different states and linked by ownership or control so that consolidated accounts are or would be required (§ 2 Z 1 VPDG). A permanent establishment counts as resident where it is located (§ 2 Z 5). Purely domestic groups are outside the VPDG. They still have to price at arm's length and keep the evidence (see "The taxable base", step 7).

## Rates, bands and thresholds

| Item | Rate or amount | Year | Source |
|---|---|---|---|
| Corporate tax on a transfer pricing adjustment | 23% | 2024 onwards | KStG § 22(1): https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10004569&Paragraf=22 |
| Ownership link that brings in § 6 Z 6 EStG | More than 25% of the capital, either direction | 2026 | EStG § 6 Z 6 lit. a: https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10004570&Paragraf=6 |
| KESt on a hidden distribution, general rate | 27.5% | 2026 | EStG § 27a(1) Z 2: https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10004570&Paragraf=27a |
| KESt the payer may withhold when the recipient is a company (§ 1(1) KStG, which includes a foreign company) | 23% | Income received from 2024 | EStG § 93(1a): https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10004570&Paragraf=93 |
| KESt when the company bears it, as a share of the net advantage | 29.87% (23 / 77) for a company shareholder; 37.93% (27.5 / 72.5) for an individual shareholder | 2026 | VPR 2021 Rz 515 and 517 (gross-up method; 37.93% for individuals; 33.33% for a company shareholder when the company rate was 25%, now 23% under EStG § 93(1a)) |
| Master file and local file: revenue test | Umsatzerlöse over EUR 50,000,000 in each of the two preceding financial years | 2026 | VPDG § 3(2): https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=20009608 |
| Country-by-country report: group revenue test | Consolidated group revenue of at least EUR 750,000,000 in the preceding financial year | 2026 | VPDG § 3(1) |
| Low value-adding intra-group services (optional simplified approach) | Cost plus 5% | 2026 | VPR 2021 Rz 95: https://findok.bmf.gv.at/findok/resources/pdf/450cc0c6-d106-4f65-ba18-e3d0d33d2227/80297.1.1.pdf |
| Routine services outside that approach, no database study | Net cost-plus mark-up between 3% and 10% (often 5%), justified on the facts | Services from 1 January 2022 | VPR 2021 Rz 90 |
| Production of master and local file on request | Within 30 days | 2026 | VPDG § 8(2) |
| Fine: country-by-country report late, missing or wrong, intentional | Up to EUR 50,000 | 2026 | FinStrG § 49b(1): https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10003898 |
| Fine: same, grossly negligent | Up to EUR 25,000 | 2026 | FinStrG § 49b(2) |
| Fine: intentional breach of a notification or record-keeping duty (CbC notification, master and local file) | Up to EUR 5,000 | 2026 | FinStrG § 51(1) lit. a and c, (2); VPR 2021 Rz 450 and 494 |
| Ruling fee (Auskunftsbescheid, § 118 BAO) | EUR 1,500; EUR 3,000 above EUR 400,000 revenue; EUR 5,000 above EUR 700,000; EUR 10,000 above the UGB small-company revenue limit; EUR 20,000 above the UGB medium-company revenue limit or for any member of a group that must prepare consolidated accounts | 2026 | BAO § 118(10): https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10003940&Paragraf=118 |
| UGB revenue limits that § 118(10) points to | EUR 12,500,000 (small) and EUR 50,000,000 (medium). The UGB-Schwellenwerte-Verordnung replaces the words "10 Millionen" and "40 Millionen" in § 221(1) Z 2 and (2) Z 2 themselves, for financial years starting on or after 1 January 2024 | 2026 | UGB § 221(1) Z 2 and (2) Z 2 with notes 2 and 6; UGB-SchweVO, BGBl. II Nr. 318/2024, §§ 1 Z 2 and Z 6, 3: https://www.ris.bka.gv.at/Dokumente/BgblAuth/BGBLA_2024_II_318/BGBLA_2024_II_318.html |
| Ruling fee if the application is rejected, treated as withdrawn under § 85(2) BAO, or withdrawn before work starts | EUR 500 | 2026 | BAO § 118(11) |
| Surcharge where the company will not name the recipient of a payment on request | 25% of the amount, on top of corporate tax | 2026 | KStG § 22(3) |

## The taxable base

1. **Recognise the transaction first.** The real economic content decides. A sham (§ 23 BAO) or an abusive arrangement (§ 22 BAO) can be disregarded. Once a transaction is recognised, the arm's length rule applies to it, including with low-tax countries (VPR 2021 Rz 21).
2. **Choose the method.** The VPR follow the OECD: comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split. Use the method that gives the most reliable result. Where reliability is equal, a traditional method beats a profit method, and the comparable uncontrolled price beats the rest (Rz 50).
3. **Services and management fees.** A charge is allowed only if the service gives the recipient an economic or commercial benefit that an independent business would pay for or do itself (the benefit test). Shareholder activities, where the parent only monitors its investment, are not chargeable. Duplicated services are not chargeable (Rz 86 and 87). Where no comparable price exists, cost plus is usual, built on all direct and indirect costs (Rz 89). For routine services the ministry accepts a net mark-up between 3% and 10% without a database study, but the right point in that range must be shown on the facts; a 5% mark-up can be raised to 10% (Rz 90). Services that use the group's own valuable intangibles are not routine (Rz 91).
4. **Low value-adding services (LVAIGS).** Supporting services that are not the group's core business, need no unique intangibles and carry no significant risk (for example accounting, payroll and HR, IT, in-house tax and legal, general administration) can be charged on the OECD simplified basis: one cost pool per category, allocated by a suitable key, with a fixed 5% mark-up on cost (pass-through costs excluded). The benefit test is then checked per category, not per charge (Rz 94 to 96). Excluded are services in the group's core business, research and development, manufacturing and production (with the related purchasing), sales, marketing and distribution, financial transactions and insurance, extraction and processing of raw materials, and management services of the managing board (Rz 97).
5. **Financing.** A loan between group companies is first tested as to whether it is a loan at all: fixed repayment date, duty to pay interest, security, and whether the borrower could borrow from a third party. Part of a loan can be treated as equity (Rz 109). For a loan from a company to its shareholder, signs that it is not a loan but a hidden distribution are: no agreement on repayment, interest dates or a credit limit, no security, a poor financial position, or small or very long repayments, always on the whole picture (Rz 111). Cash pooling, guarantees, hedging and captive insurance have their own sections (VPR 2021 sections 1.3.3.2 to 1.3.3.5).
6. **Primary adjustment and its follow-on.** If prices are not at arm's length, the Austrian profit is raised under § 6 Z 6 EStG with Article 9 of the treaty (the primary adjustment, Rz 499) and taxed at 23% (KStG § 22(1)). The book side follows: the preferred route is a transfer pricing receivable (Verrechnungspreisforderung) against the related company, as a repayment claim (Rz 507 and 508). Where the receivable cannot be booked because the related party will not accept it, and the counterparty is the parent, a hidden distribution is tested; waiving the receivable meets it, and the company must then account for the KESt it did not withhold (Rz 509, 514 and 515). Writing the receivable down is not enough to create a hidden distribution; waiving it for shareholder reasons is (Rz 510, as amended in 2025). Where the counterparty is a sister company, the advantage is a distribution to the common parent and a contribution by the parent to the sister (Rz 519).
7. **Documentation for everyone.** Even below the VPDG threshold, books must allow the tax profit to be worked out on arm's length values (§ 124 BAO), and the vouchers must be kept so that every entry can be checked, which for related-party dealings means showing that the price meets § 6 Z 6 EStG and Article 9 (§ 131(1) Z 5 BAO; VPR 2021 Rz 402 to 405). Records are kept for seven years, longer while a relevant procedure is open (§ 132(1) BAO).
8. **The VPDG threshold.** Master file and local file are required for a financial year when the Austrian unit's Umsatzerlöse exceeded EUR 50,000,000 in each of the two preceding financial years. Umsatzerlöse has the UGB meaning: revenue from products and services after deductions, VAT and other turnover-based taxes (§ 189a Z 5 UGB). The test looks at the Austrian unit as a whole and at its last annual accounts; once two years are over the limit, the duty applies in the third year whatever that year's revenue (VPR 2021 Rz 478). The duty ends from the following year once revenue has not exceeded the limit in two consecutive years (§ 3(2) VPDG). The test is revenue only; a unit with no cross-border transactions in the year still prepares both files, though the local file then has little to say (Rz 480). An Austrian holding company that is the ultimate parent but has revenue under the limit keeps no master or local file under § 3(2), but must hand over a master file on request where another country requires one from a group member there (§ 3(3) VPDG; Rz 479).
9. **What the files contain.** Master file: group structure charts, business description (value drivers, the supply chain of the five largest products or services and any over 5% of group revenue, main service arrangements, markets, a short functional analysis, restructurings), intangibles, intra-group financing, and the consolidated accounts plus existing APAs and rulings (VPDG-DV §§ 1 to 6). Local file: the Austrian unit's management and strategy, its main competitors, each material intra-group transaction with amounts, contracts and the transfer pricing analysis, and financial information (VPDG-DV §§ 7 to 10). The files may be kept in an official language admitted in tax proceedings (German) or in English (§ 10(1) VPDG).
10. **VAT follows.** A transfer pricing correction can change the VAT base through the normal value rule in § 4(9) UStG or through a § 16 UStG correction (VPR 2021 Rz 521 to 524). See `at-vat-return`.

## Deadlines and filing

| What | When | Source |
|---|---|---|
| Master file and local file must exist | From the filing of the corporate tax return (or the partnership's return) for the year. For the 2026 return deadline, see `at-corporate-income-tax` | VPDG § 8(2) |
| Hand over master and local file | Within 30 days of the tax office's request, with the copies the files refer to | VPDG § 8(2); VPR 2021 Rz 493 |
| Country-by-country report | Within 12 months after the last day of the reporting financial year, electronically through FinanzOnline, by the ultimate parent resident in Austria or an Austrian unit that has stepped into its duty | VPDG §§ 4 and 8(1) |
| CbC notification (whether the unit is the ultimate or surrogate parent, or who files for the group and where) | By the last day of the financial year being reported | VPDG § 4 |
| KESt on a hidden distribution | Paid over within one week after the distribution is received; the company is liable for KESt it fails to withhold | EStG §§ 95(1) and 96(1) Z 1 lit. a: https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10004570&Paragraf=96 |
| Ruling decision (§ 118 BAO) | The tax office should decide within two months of the application, where practicable ("tunlichst") | BAO § 118(5a) |
| Ruling application | Electronically through FinanzOnline where the applicant has an Austrian tax number; it must state the facts, the special interest, the legal questions, a reasoned view and the figures that set the fee | BAO § 118(4) |
| Keep the records | Seven years, longer while a relevant procedure is open | BAO § 132(1) |

## Penalties and interest

- **Country-by-country report** not filed on time, or items of Annexes 1 to 3 missing or wrong: up to EUR 50,000 if intentional, up to EUR 25,000 if grossly negligent. Simple negligence with wrong data is not punished (FinStrG § 49b).
- **CbC notification** under § 4 VPDG missed on purpose: a Finanzordnungswidrigkeit under § 51(1) lit. a FinStrG, up to EUR 5,000 (VPR 2021 Rz 450). § 51 covers intentional breaches only. The tax office can also impose a coercive penalty under § 111 BAO.
- **Master file and local file** are records under the BAO; an intentional breach of the duty to keep them is a Finanzordnungswidrigkeit under § 51(1) lit. c FinStrG, up to EUR 5,000 (VPR 2021 Rz 494). The bigger cost in practice is the adjustment itself, estimated by the tax office where the evidence is missing.
- **Tax on the adjustment:** 23% corporate tax plus, where a hidden distribution follows, KESt. Late-payment surcharges (§ 217 BAO) and Anspruchszinsen (§ 205 BAO) follow the general rules in `at-cross-border`. Where the company is held liable for KESt on an obvious hidden distribution, the ministry accepts that the error can be slight negligence and that the company can apply under § 217(7) BAO not to be charged the late-payment surcharge (VPR 2021 Rz 518).
- **Unnamed recipients:** where the company does not name the recipient of a payment on request, a 25% surcharge on the amount applies on top of the corporate tax (KStG § 22(3)).

## Cross-border points

- **Corresponding adjustment.** If another state raises the profit of the foreign party and the tax office agrees the result is at arm's length, Austria can lower the Austrian profit on application under § 6 Z 6 EStG with Article 9, without a MAP. The application needs proof of the foreign adjustment, the facts, the years, the amounts and any appeals. There is no automatic adjustment (VPR 2021 Rz 502). Procedurally it runs through reopening (§ 303 BAO), § 299 BAO or an appeal (§ 243 BAO), within the normal time limits (Rz 503).
- **MAP and arbitration.** Where double tax remains, the company can ask for a mutual agreement procedure under the treaty article modelled on Article 25 OECD, the EU Arbitration Convention 90/436/EEC, or the EU-BStbG (Rz 525). Under the EU-BStbG (BGBl. I Nr. 62/2019, Directive 2017/1852), a complaint can be filed from the first notice of the measure and must be filed within three years of notice of the decisive tax assessment (§ 10(1)). The Austrian competent authority confirms receipt within two months (§ 11) and accepts or rejects within six months (§ 16(1)). The states aim to agree within two years of accepting the complaint (§ 24(1)). The EU-BStbG applies to income of tax periods starting on or after 1 January 2018. A time-barred year can only be reopened to give effect to a MAP or arbitration result (Rz 503).
- **Rulings and APAs.** A ruling under § 118 BAO covers facts not yet carried out, in five areas including international tax law (§ 118(2) Z 3); for transfer pricing it can settle the method, how it is applied (for example the cost base or the service categories) and whether a database study can be used (VPR 2021 Rz 526). It binds only Austria (Rz 527). For a bilateral answer, Austria runs bilateral and multilateral APAs on request under the treaty MAP article (Rz 528, pointing to the BMF information of 5 May 2022, 2022-0.300.851).
- **Withholding on a corrected payment.** When an Austrian company later pays a transfer pricing liability (for example a higher royalty agreed after a foreign audit), check the § 99 EStG withholding on that payment (Rz 512). Rates are in `at-cross-border`.
- **KESt relief for a foreign parent.** The 23% (or 27.5%) is withheld in full where the conditions for relief at source are not met, for example on an obvious hidden distribution or without the residence certificate on the official form. Treaty or EU relief is then given by refund from the Finanzamt für Großbetriebe (VPR 2021 Rz 515). The EU parent-subsidiary exemption (§ 94 Z 2 EStG: an EU company holding at least 10% for at least one year) lets the minister require withholding on hidden distributions by regulation, with refund on application. That regulation is in force: the payer must withhold on an obvious hidden distribution, meaning one the payer knew or, with the care of a prudent businessman, should have known of from the case law or published administrative practice (Verordnung BGBl. Nr. 56/1995 §§ 1 Z 2 and 3). It must also withhold where abuse indicators are present without the parent's written statement, or where it cannot prove the exemption conditions, including a timely residence certificate (§ 1 Z 1 and Z 3 with §§ 2 and 4). A hidden distribution to a qualifying EU parent that is not obvious stays exempt at source. A treaty rate applies to the gross distribution, so a company that bears the KESt still pays the domestic grossed-up amount and the parent reclaims the excess (Rz 517).
- **Exit and transfer of assets.** Moving assets or functions abroad is valued at arm's length under § 6 Z 6 lit. a and b EStG; the deferral and instalment rules are in `at-cross-border`.

## Worked examples

### Example 1: management fee to a foreign parent above arm's length, tax year 2026

Alpha GmbH, an Austrian distributor, is 100% owned by a parent company resident outside the EU, so the § 94 Z 2 EStG exemption is not available. For 2026 the parent charges Alpha a management fee of EUR 600,000. The tax office finds that the parent's services pass the benefit test only for accounting, HR and IT support that cost the parent EUR 400,000, and that these are low value-adding services. The arm's length fee is cost plus 5%: 400,000 x 1.05 = EUR 420,000. The excess of EUR 180,000 is added back to Alpha's 2026 profit (§ 6 Z 6 EStG with Article 9; VPR 2021 Rz 95 and 499). Corporate tax at 23% on that is EUR 41,400.

The parent will not accept a repayment claim and Alpha waives it, so the follow-on is a hidden distribution to the parent (Rz 509 and 514). Alpha failed to withhold KESt and is liable for it (§ 95(1) EStG). Because the recipient is a company, Alpha can withhold at 23% (§ 93(1a) EStG); the VPR apply the company rate to a company shareholder (Rz 515 and 517). If the parent pays the KESt back to Alpha, the KESt is 23% of 180,000 = EUR 41,400. If Alpha bears it, the distribution is grossed up: 180,000 / 0.77 = EUR 233,766.23, and the KESt is EUR 53,766.23 (29.87% of the net amount). At the general 27.5% rate, which applies if Alpha does not use § 93(1a) (and always for an individual shareholder), the figures are EUR 49,500 borne by the parent, or 180,000 / 0.725 = EUR 248,275.86 gross and EUR 68,275.86 KESt borne by Alpha (37.93%). The KESt Alpha bears is part of the distribution, so it does not reduce Alpha's taxable profit (§ 8(2) KStG). Any treaty relief for the parent is claimed by refund (Rz 515).

At the company rate, with Alpha bearing the KESt, the Austrian cost of the adjustment is 41,400 + 53,766.23 = EUR 95,166.23 (EUR 109,675.86 at 27.5%), before late-payment surcharges and Anspruchszinsen.

```oa-check
name: Alpha GmbH, excess management fee to foreign parent, 2026
inputs:
  fee_charged: 600000
  parent_cost_of_qualifying_services: 400000
  lvaigs_markup_pct: 5
  cit_rate_pct: 23
  kest_rate_pct: 27.5
  kest_company_rate_pct: 23
steps:
  - arm_length_fee: parent_cost_of_qualifying_services * (1 + lvaigs_markup_pct / 100)
  - adjustment: fee_charged - arm_length_fee
  - extra_cit: adjustment * cit_rate_pct / 100
  - kest_borne_by_parent: adjustment * kest_rate_pct / 100
  - grossed_up_distribution: adjustment / (1 - kest_rate_pct / 100)
  - kest_borne_by_company: grossed_up_distribution - adjustment
  - kest_23_borne_by_parent: adjustment * kest_company_rate_pct / 100
  - kest_23_borne_by_company: adjustment / (1 - kest_company_rate_pct / 100) * kest_company_rate_pct / 100
  - total_austrian_tax_company_bears_kest: extra_cit + kest_borne_by_company
  - total_austrian_tax_company_bears_kest_23: extra_cit + kest_23_borne_by_company
expected:
  arm_length_fee: 420000
  adjustment: 180000
  extra_cit: 41400
  kest_borne_by_parent: 49500
  grossed_up_distribution: 248275.86

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