Legal Succession in the Field of Business Taxation

Legal succession and questions related to it are among the core issues of law. This is also true for tax law, most notably in the field of (corporate) income tax law, where corporate reorganizations inevitably entail questions of legal succession. Nevertheless, neither the Reorganization Tax Act (UmgrStG) nor the Individual Income Tax Act (EStG) and the Corporate Income Tax Act (KStG) provide for a comprehensive set of rules to solve all the legal issues raised. Consequently, many questions remain unresolved and are regardless of their paramount practical relevance for both taxpayers and tax authorities also dogmatically unexplored to a large extent up to now. This calls for a comprehensive examination, a task, which the habilitation project at hand is to achieve. The existing studies so far only touch upon separate and specific questions of the topic or deal with the treatment of fiscal rights and obligations in the case of an inheritance (transfer mortis causa). Beyond that, general research on the issue of legal succession in the field of tax law abated in the beginning of the 1990ies. Thus, a comprehensive study on the dogmatics of the treatment of fiscal positions in the context of succession events from the perspective of (corporate) income tax law is missing in the Austrian tax jurisprudence. Moreover, since tax law is in a constant state of flux, even existing studies on specific issues of the overall topic of legal succession have to be reconsidered. This is particularly true for the field of business tax law and its International and European dimension, in which the case law of the European Court of Justice (ECJ) has emerged as decisive factor. This gap is to be closed by the habilitation project at hand. Based on the concepts of legal succession in civil law and public law, the question regarding the existence of a tax specific concept will be examined. In other words it should be identified whether there is a separate concept of legal succession in tax law or whether, rather, it is necessary to develop in each case of a succession event according to civil law, by means of interpretation of the respective provisions of substantive tax law, whether a succession into (latent) fiscal rights and obligations (other than taxes due) is permissible. For this purpose Sec 19 of the Federal Fiscal Code (BAO) is analyzed at the outset. Subsequently, the relevant constitutional framework is scrutinized with the overall goal of deducting and abstracting general principles and requirements for the succession into fiscal positions. At the end, a thesis on the (constitutional) requirements for (corporate) tax treatment of fiscal rights and obligations in the course of succession events such as corporate reorganizations is formulated. These overall principles then serve as "criterion" for testing the existing rules of substantive tax law concerning legal succession. Thereby, not only contradictions and inconsistencies will be identified but also common concepts, which in turn may be used for solving those cases that de lege lata are lacking an explicit statutory regulation. Consequently, the study at hand follows a comparative and systematizing approach, with an interdisciplinary orientation. By taking into consideration different legal disciplines, it will bridge the (supposed) gap between civil law, on the one hand, and tax law as a part of public law, on the other hand. Furthermore, the examination will not stop at the borders of the Austrian tax jurisdiction but will also include foreign legal orders. In this way, the habilitation project will not only fundamentally stimulate further academic discussions but will also demonstrate the legal requirements and limits of future deliberations on reform. Thus, the thesis will serve the national legislator in that it makes available a scientifically founded survey dealing with the legal requirements and limits for design of tax provisions relating to the treatment of fiscal positions in the context of succession events.

Nothing lasts forever! This also holds true for the field of business taxation. Business entities are repeatedly restructured, parts of it are alienated, transferred or they are subject to reorganizations that change their legal existence. But what happens to tax attributes and other fiscal positions like unused loss carry forwards, recapture obligations, running and not yet fulfilled holding periods and the like under such circumstances? May such tax attributes be carried over to another person and used there in the same way as in the sphere of the predecessor? And if yes, on which legal grounds? In more general terms: Which legal characteristics must a transfer of assets and liabilities show in order to justify an interpersonal continuity of tax attributes? In search of answers to the multifaceted questions of the treatment of legal positions in the context of changes in the personal attribution of income producing assets and liabilities it became apparent that the issue of legal succession in the field of business taxation is much more that just a question of applying civil law concepts such as universal succession to tax law. First and foremost Sec. 19 para. 1 of the Federal Fiscal Code cannot be understood a norm that transforms the principle of universal succession under civil law on the whole in tax law. Rather, Sec. 19 para. 1 of the Federal Fiscal Code only provides for a legal succession of materialized tax claims and related procedural rights and obligations to enforce these claims. It does not address other tax attributes or latent fiscal positions resulting from income tax law. Whether a succession into (latent) fiscal rights and obligations other than materialized tax claims is permissible has to be determined by means of interpretation of the respective provisions of substantive tax law. Of particular importance in this context is the interplay between treating a transfer of assets and liabilities as realization event by which all hidden reserves are disclosed and the suppression of realization. The possibility or even obligation to continue existing tax attributes of the processor at the level of the legal successor of the assets and liabilities often depends on the tax treatment of the transfer itself. Especially for positions connected with or resulting from the determination of profits the principle of book value carryover can serve as a general expression of continuity of the business or branch of business as the object of profit determination.