VZCZCXRO6123
RR RUEHIK
DE RUEHVI #1373/01 2941512
ZNR UUUUU ZZH
R 211512Z OCT 09
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 3470
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCNMEM/EU MEMBER STATES
RUEHFT/AMCONSUL FRANKFURT 8600

UNCLAS SECTION 01 OF 02 VIENNA 001373 
 
SIPDIS 
 
TREASURY FOR IRS AND OASIA/ICB/P.MAIER 
FRANKFURT FOR IRS/BARBARA FRANKLIN 
 
E.O. 12958: N/A 
TAGS: EFIN AU
SUBJECT: Understanding Austria's New Tax Information Exchange 
Process 
 
REF:  (A) VIENNA 1212; (B) VIENNA 1088 
 
VIENNA 00001373  001.2 OF 002 
 
 
¶1. SUMMARY: the Administrative Assistance Implementing Act (in 
effect since September 9, 2009) provides a new basis for handling 
foreign authorities' assistance requests for exchange of tax 
information.  Where supported by appropriate bilateral agreements, 
Austrian authorities will provide information in cases of 
administrative tax proceedings -- including data formerly blocked by 
bank secrecy regulations, and not limited (as in the past) to 
criminal tax proceedings.  Since the new procedure only applies for 
newly revised bilateral tax conventions, IRS/Treasury may wish to 
consider amending the U.S.-Austria tax conventions to take advantage 
of expanded information exchange opportunities.  END SUMMARY. 
 
¶2. This cable details Austria's new Law on Procedures for 
Administrative Assistance (ref A) and new procedures used by 
Austrian Finance Ministry (MoF) in responding to foreign tax 
authority requests for exchange of tax information.  We based this 
analysis on GoA commentary attached to the bill (as sent to 
Parliament) and from an MoF expert presentation on October 8. 
 
¶3. The new law regulates the implementation of OECD standards for 
cross-border information exchange in income and property tax matters 
pursuant to the OECD's Model Taxation Convention, particularly 
article 26.  The law covers all kinds of mutual assistance ("letters 
rogatory") requests, from administrative assistance for tax 
assessment to criminal prosecutions -- importantly, requests need 
NOT/NOT involve criminal proceedings.  Paragraph 38 of Austria's 
Banking Act, which regulates bank secrecy and requires initiated 
penal proceedings before releasing information (a very high barrier 
for foreign authorities) will NO LONGER APPLY in cases of foreign 
letters rogatory requests where supported by international 
agreements. 
 
¶4. New or revised bilateral tax treaties will be the basis for 
implementing the new tax information exchange procedure, and will 
regulate the extent of assistance provided by the Austrian 
authorities.  For foreign requests, the new procedures will apply 
beginning with the tax year AFTER a new/amended bilateral tax treaty 
goes into effect.  There will be no retroactive application. 
 
¶5. The MoF is currently the "responsible authority" for implementing 
the new procedure.  An administrative assistance request from a 
foreign tax authority must be substantiated ("begruendet") and must 
fulfill certain conditions: 
-- it must be based on bilateral taxation conventions, EU Community 
law, or other international legal agreements; and 
-- it must provide an argument why the information requested is 
foreseeably relevant for tax assessment; 
 
¶6. A request must include: 
-- a clear designation of the person(s) affected; 
-- a statement that the requesting foreign authority has exhausted 
its domestic possibilities; 
-- a statement that the foreign authority has reason to believe that 
the taxpayer has unlawfully avoided or withheld payment of a tax 
burden. 
The MoF has emphasized that "fishing expeditions" by foreign tax 
authorities are NOT/NOT covered by the new law, nor is any automatic 
data exchange foreseen. 
 
TIMETABLE FOR REQUESTS / APPEALS 
- - - - - - - - - - - - - - - - - 
 
¶7. As responsible authority, the MoF will vet foreign requests for 
assistance and if procedurally correct, inform the accountholder(s) 
and bank(s) named in the request about the existence of a foreign 
administrative assistance request and the information sought. 
Within two weeks, the accountholder may ask the MoF for official 
notification that information exchange requirements are met.  If 
notification is requested, then processing will start six weeks 
after the delivery of that notification.  If the accountholder does 
not request notification, the MoF will start processing the foreign 
assistance request after expiration of the original two-week period. 
 
 
¶8. If the accountholder files an appeal to Austria's Administrative 
Court or Constitutional Court (petitioning also for injunction), MoF 
processing of the foreign request must await a high court ruling. 
After all waiting periods and appeals are exhausted, the MoF will 
instruct Austrian bank(s) with relevant information to provide all 
available information, even data covered by bank secrecy. 
 
¶9. The administrative process in Austria to obtain requested 
information will be the same as for a domestic case pursuant to 
paragraph 49/2 of the Federal Fiscal Code (in German: 
Bundesabgabenordnung).  This also applies to criminal cases: 
 
VIENNA 00001373  002.2 OF 002 
 
 
domestic rules for administrative criminal procedures will apply for 
requests involving foreign administrative or judicial criminal 
proceedings. 
 
HOH