The Austrian Court of Auditors (der Rechnungshof - RH) has recently revealed its report in which it has warned over country's group tax regime.

In the report, RH has warned that there was a serious risk of companies abusing Austria's group tax regime. The scope of tax shelter has extends to foreign subsidiaries resident in non treaty partner states.

Also, there is no legal basis that guarantees tax information exchange as Austria has not yet concluded a bilateral tax information exchange agreement or a double taxation accord with some countries. The auditors have said that the Finance Ministry stresses on comprehensive mutual assistance with other countries.

The Court of Auditors has recommended that the Government tightens the regime to limit the tax loopholes and cut the risk of abuse of the system. For achieving this goal, the RH supports that the foreign investors should only get benefit from the group tax mechanism.

Austrian state has lost tax intake of €1.3bn since 2008 in wake of relocation of businesses. The experts say that the Austrian group taxation model must not be eliminated.

The model was introduced under the under former Austrian Finance Minister Karl-Heinz Grasser. It allows the companies to include losses incurred by foreign subsidiaries into the taxable base.