4. Tax

Contributed by: Markus Fellner, Elisabeth Fischer-Schwarz, Veronika Seronova and Mario Burger, Fellner Wratzfeld & Partners

basis. In addition, consumer borrowers have (as a general rule) a mandatory right of early repayment.

3.8 Public Acquisition Finance

Austrian law does not recognise or regulate the concept of “certain funds”.

Subject to the Austrian Takeover Code (Übernahmegesetz), which implements the European Takeover Directive, public takeover transactions require debt or equity funding for the acquisition of the target shares (under the hypothesis of a full acceptance of an offer) to be available and to be certified by an independent expert. That certificate must be included in the published offer documentation.

Other than that, “certain funds” provisions are not mandatory in public transactions but may be used by way of contractual arrangement on a case-by-case basis.

In terms of documentation, there is a divide in the Austrian lending market. On the one hand, major and local Austrian banks often provide debt financing to their new and existing customers on the basis of in-house standard “shortform” documentation (in conjunction with their general terms and conditions). On the other hand, international banks targeting the Austrian market, as well as Austrian banks aiming at the syndication of their lending engagements, increasingly refer to “long-form” documentation that is frequently structured and drafted along the lines of the standard provided by the Loan Markets Association.

In the context of public M&A takeover transactions, no public filing or other disclosure of the underlying financial documentation is required. Including the independent expert’s attestation/ confirmation regarding the available funding in the offer document will suffice as a matter of law.

4.1 Withholding Tax

Principal repayments under loan transactions are not subject to withholding tax.

Interest payments made to lenders are not subject to withholding tax as a general rule. Rather, such payments will have to be taken into account for the purposes of the (corporate) income tax of the lender.

4.2 Other Taxes, Duties, Charges or Tax Considerations

There are certain types of security arrangements – for example, suretyships (Bürgschaften) and assignments (Zessionen) – that, on a standalone basis, would be subject to stamp duty. There is an exception, however, when these transactions are entered into for purposes of securing loan obligations (which are themselves exempted from stamp duty).

If debt funding is structured by way of the acquisition of loan receivables on a commercial basis, which Austrian banking law qualifies as “factoring”, then such assignment may also be subject to Austrian stamp duty (applied at a rate of 0.8 %, calculated on the basis of the consideration for the acquisition of such loan).

4.3 Usury Laws

There are no regulatory limitations on interest charged to customers (borrowers). However, there are certain basic limitations under Austrian civil law prohibiting “usury” (Wucher). Such interest agreements may only be considered prohibited and unenforceable if and to the extent that