Global Mobility Tax

Austria | Austrian Federal Finance court decision regarding daily and overnight allowances for trips to temporary work locations

Summary

On March 18, the Austrian Federal Ministry of Finance posted Federal Finance Court Decision No. RV/7105854/2019 online, clarifying daily and overnight allowances for trips to temporary work locations.

The detail

The Taxpayer, an employee, requested the tax-free treatment of daily and overnight allowances for business trips. The Tax Office denied the specified daily and overnight allowances, holding that the trips didn’t qualify as travel under the Income Tax Act because the locations visited were the company’s permanent establishments. The Taxpayer argued that the trips qualified as travel under the Income Tax Act, because the locations were not the Taxpayer’s place of work, and that they only traveled to these locations for meetings at long intervals when necessary. On appeal, the Federal Finance Court denied the Taxpayer’s argument, finding that:

1. The Taxpayer was not entitled to the specified tax-free allowances because the locations visited were considered temporary work locations, and that travel to those locations don’t constitute as qualifying business trips;
2. A business trip is not considered to be taking place when an employee works at multiple locations of the company and has a workplace available there. For the assessment, the organizational integration at the respective workplace is decisive, not the specific arrangement of the workplace.

What this means for employers

Employers should ensure compliance with tax regulations when reimbursing employees for travel-related expenses, particularly regarding daily and overnight allowances. Even though the conditions for tax-free travel expenses are very restrictive in Austria, we recommend employers reviewing their business trips to maximize any tax-saving potential. We are happy to assist with this review.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Evelyn Kappel
Senior Manager

Olivia Stiedl
Partner

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