Practitioners in the Austrian market have seen a stop-start, stuttering kind of year, with fortunes fluctuating from month to month at times. "September to October was very weak, very quiet, then it picked up – in November we couldn't move for work! ...
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Practitioners in the Austrian market have seen a stop-start, stuttering kind of year, with fortunes fluctuating from month to month at times. "September to October was very weak, very quiet, then it picked up – in November we couldn't move for work! Then it quietened down in April again and was much slower," said one partner.
Corporate teams have been kicking their heels primarily, as the market shows very little signs of life and this has had a knock-on effect on tax: "M&A is flat yes. Some big deals are still around, but most stopped, the financing drying out...most don't get past the preliminary stage," said Wolf Theiss's Niklas Schmidt, while another sees the quietness demonstrated in other ways: "Put it this way: the M&A people are going home at a reasonable time at the moment!"
A trend, which has been seen not just in Austria, is an increase in scrutiny from the tax authorities. This is a consequence of the economic situation, as officials work harder to collect more tax.
"The authorities undoubtedly are trying to raise revenues, I can see. In the past, you could talk to them and come to a reasonable solution. That doesn't work anymore!" said a partner, while another highlights a paradox of the authorities' approach: "They have not actually stepped up the number of audits. There is the monstrous, ludicrous idea of cutting expenditure on civil service but wanting more audits – it doesn't go together! There is no swamping or anything."
This aggression has been apparent in the number of cases making it to the courts too: "There is continuous litigation, due to the government trying to increase revenues. This is noticeable," says an adviser, while another goes as far as claiming that they "try to play mean tricks".
A noticeable tactic though has been that, by and large, the government has not targeted fiscal measures, such as tax rises, at big corporations, leaving them to help drive the recovery of the economy: "For moving the needle austerity packages have aimed at individuals and corporations. At the same time taxation needs to be kept at an agreeable level to boost the market place and to attract foreign investment. A tricky exercise," said Michael Weisman at Deloitte.
There has not been too much in the way of significant legal changes, although a new real estate law came in on April 1 which "will see them considered as a capital markets product, with a 25% tax rate", though this will only take effect in 2013.
Tax professionals remain optimistic about the Austrian market however. All they are looking for is more stability. "On the whole, Austria's tax system still remains quite attractive globally," said Schmidt.
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