Spendenabzug bei DBA-befreiten Einkünften

In a recent decision, the Austrian Federal Fiscal Court (BFG) held that foreign income exempt from Austrian income tax due to a tax treaty must not be considered when determining the basis for the 10%-maximum deductibility of donations according to Sec 18 para 1 no 7 Austrian Income Tax Act. Hence, only the domestic income can be taken into account for the determination of the 10%-limit. With this, the court strongly deviates from its established case law, which underlines that domestic as well as foreign income is to be considered when determining the “total amount of income”. This view is also supported by several decisions of the Austrian Supreme Administrative Court (VwGH), justified by the fact that in the case of cross-border situations, taxation should generally be achieved in the same way as in purely domestic situations. The decision of the Austrian Federal Fiscal Court is striking in light of the previously held view. Michael Lang argues that the court should return to its established case law.