BFG: Protection of trust in the case of information from a tax authority

Nov 10, 2021 Benn-Ibler Rechtsanwälte

The Federal Fiscal Court (Bundesfinanzgericht, BFG) ruled on the protection of legitimate expectations in the case of information provided by a tax authority regarding tax liability.

The appellant earned income from employment in Liechtenstein. During the week he lived there in a rented flat, otherwise with his family in Austria.

In the income tax assessment notice issued, the tax office (Finanzamt, FA) stated that it was to be assumed that his centre of life was in Austria and that Austria therefore had the right of taxation. The FA demanded arrears interest for this period. In his complaint, the appellant stated that he had requested information on this matter from the FA. He was informed that there would be no tax liability in Austria. In accordance with the principle of good faith, the appellant had relied on the accuracy of this statement.

The BFG stated that in the case of several residences in different countries, the centre of life is to be taken into account. According to the BFG, the strongest relationship normally exists with the place where one regularly lives with one's family. In the present case, this was Austria.

With regard to the principle of good faith, the law must allow the enforcement a margin of discretion, which did not exist in the case of the complaint. Moreover, it was not possible to determine the content of the appellant’s request for information. It was therefore not possible to establish that the information was incorrect. Furthermore, the BFG stated that the information had not influenced the appellant’s behaviour in any case, and that he had therefore not made any arrangements on the basis of the information, as he had already been employed in Liechtenstein for several years before obtaining the information. The appellant had also not alleged that he would have given up his job if the information had been different. Consequently, the complaint had to be dismissed.

BFG RV/3100295/2020 (21. 09.2021)

A comparable situation was already found in the decision Ra 2021/15/0001, where the appellant concerned, unlike the above-mentioned complainant, had already made arrangements in reliance on the correctness of the confirmation. Here, however, the Administrative Court (VwGH) also held that the principle of good faith requires a leeway for enforcement, but this does not apply to tax obligations, as they are clearly regulated by law. In addition, the information provided by the FA in the case Ra 2021/15/0001 was a written confirmation and thus, in contrast to the oral information in this case, its content was verifiable. Nevertheless, this information did not have any legal qualification.