Annual Report 2013 of the Austrian Tax and Customs Administration

Facts and Figures Tax and Customs Administration 2013 General Information

Tax Offices (TO)

Economic Data

FinanzOnline users

Gross domestic product (compared to 2012) Quota of charges (% of GDP)

0.30% 43.10%

Number of phone calls Average waiting time phone calls

Inflation

2.00%

General Assessment

Unemployment rate (according to Eurostat)

4.90%

FinanzOnline quota employee assessment

Consumer price index (2010 = 100) Budget deficit (% of GDP) Maastricht criteria*

107.90% -2.30 %

Processing time employee assessments (receipt until assessment notice)

75.58 bn euro

(receipt until assessment notice)

Earnings according to budget

71.36 bn euro

No. of annual employee assessments completed Completed receipts family allowance

2

VAT incl. import VAT of customs

24.87 bn euro

Wage tax

24.60 bn euro

Income tax

3.12 bn euro

Corporation tax

6.02 bn euro

Capital yields taxes

2.72 bn euro

Customs duties

0.21 bn euro

Excise duties on alcohol

0.32 bn euro

Excise duties on mineral oil

4.17 bn euro

Excise duties on tobacco

1.66 bn euro

Transfers of family allowance

3.16 bn euro

5.89 m calls 37.7 seconds 60% 17 calendar days

Processing Time Family Allowance

Spendings according to budget

Tax/Customs Revenue (Cash Flow Statement – Tax Receipts of the Central Government – Budget Chapter 16)

3.07 m users

20 calendar days 3.69 m cases 574,909 cases

Business Assessment and Auditing FinanzOnline quota business assessment

85%

Processing Time Business Assessment (receipt until assessment notice) Completed tax returns No. of audits/of special VAT audits Surplus from audits/special VAT audits No. of inquiries/reviews Surplus from inquiries/reviews No. of joint audits of wage-dependent taxes Surplus from wage-dependent taxes

19 calendar days 2.04 m returns 27,595 cases 642.98 m euro 42.074 cases 145.94 m euro 11,594 cases 149.04 m euro

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No. of Staff (FTEs) sum women university graduates employess with A-leves Ist of Jan. 2014* Source: PM-SAP, I/1

Customs Offices (CO) Traffic of Goods No. of clearances

4.05 m clearances

Controls (declarations)

188,192 cases

Audits and Controls No. of completed audits

1,132 cases

Surplus

25.29 m euro

Tax offices

6,232 54%

5%

46%

Tax investigation unit

128 39%

5%

63%

Audit unit for large traders

455 37%

75%

15%

Financial police

387 25%

3%

44%

Customs offices

1,489 30%

3%

54%

Total

Controls (customs surveillance)

5,514 cases

Audit Unit for Large Traders (AULT)

Mobile controls

2,870 cases

No. of audits/special VAT audits

8,691 48%

Surplus audits/special VAT audits No. of audits VAT foreigners

Excise Duties Declarations (incl. distillation of alcohol)

57,943 declarations

Supervision

7,963 cases

Surplus audits VAT foreigners No. of cases other auditing measures Surplus other auditing measures

Travellers 291,532 travellers

Tax refunds

1.72 declarations

CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) Cash control

1,894 seizures

Drugs

216 seizures

Reports to other administrations

4

147 seizures 130 discoveries

Counterfeit goods

1,462 reports

Cigarette smuggling cases

3,175 discoveries

No. of detected cigarettes

12.50 m pieces

Material expenses TOs/COs/AULT/TI/finpol

3,290 cases 690.23 m euro 417 cases 126.21 m euro 828 cases 6.82 m euro

No. of cases TI Surplus TI

136 cases 27.54 m euro

Tax Offices (TO)

Seizures

Personnel costs TOs/COs/AULT/TI/finpol

46%

Tax Investigation Unit (TI)

Controls of travellers

Budget in million Euro

8%

preliminary

budget 2013

514.83 516.34 92.20 95.11

Tax Office for Duties, Transfer Taxes and Games of Chance No. of audits Surplus from audits

532 cases 91.57 m euro

Safeguarding of Revenue Arrears with issued statements

1,822 m euro

Total arrears

7,674 m euro

Financial Police (Finpol) No. of controlled companies

36,467 controls

No. of controlled employees

73,599 employees

No. of illegal employees

11,310 employees

No. of games of chance controls No. of criminal charges * (excl. seasonal staff, trainees, apprentices)

661 controls 9,867 charges 5

Dear Reader, Highly committed employees, farsighted management and a steady focus on strategic objectives – these were the key success factors for the tax and customs administration in 2013. The administration was guided during the year by six strategic objectives that were specified in detail using main focal points. With respect to the key responsibilities of the tax and customs administration, the objectives of customer relationship management, risk-oriented audit and control activities, timely and accurate tax collection, and protecting society and the economy were critical factors in the design and further development of activities. We also redefined our objectives within the administration with respect to organisation development and our employee orientation. The focus in 2013, for example, was on cross-office networking. In addition to the expansion of cooperations and networks in the interests of good public governance, cooperation across offices was also promoted. The motto for 2013, „Effective Networking“, was brought to life and successfully implemented in day-to-day work processes. Networking was also extensively implemented in the tax and customs areas, allowing, for example, data on company exports to be compared, and with respect to anti-fraud efforts, which benefited from cooperations and an increased exchange of information. Cross-border networking also took place, which is why our colleagues in foreign administrations continued to show great interest in Austrian anti-fraud measures in 2013. The successes achieved by, for example, cooperation between the Austrian Tax Investigations unit and the Austrian Public Prosecutor‘s Office for Combating Economic Crimes and Corruption (Wirtschafts- und Korruptionsstaatsanwaltschaft), and anti-fraud measures confirm the value of effective cooperation within our organisation and with external partners. In this respect, the administration reflects developments around the world showing that strategic partnerships are essential for success. In order to protect society and the economy, the Austrian tax and customs administration must perform a broad range of duties. Our human resources policy is designed to ensure the best progress as a knowledge-based organisation. The performance, good reputation and willingness to work of our employees show that we were right. I would like to thank our employees in the tax and customs administration and their dedicated contribution to the successes achieved in 2013.

Hans Georg Kramer, CFP Secretary General for the Austrian Federal Ministry of Finance

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A. Introduction

Inhalt Key figures at a glance

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A. Introduction Organisational structure B. Our key responsibilities Overview of strategy and objectives Objective I. Customer relationship management Objective II. Risk-oriented auditing and control activities Objective III. Timely and accurate tax collection Objective IV. Protecting society and the economy

9 9 11 12 13 18 23 25

C. Internal development Objective V. Employee orientation Objective VI. Organisation development

29 29 33

D. Social responsibility 1. Fair Play: an initiative for compliance and tax compliance 2. Investment in the future: information for youth and those remaining young at heart 3. Sports

37 37 38 38

E. Outlook 1. Full assessment for agricultural and forestry land 2. Telephone project: technical support for improved service and employee relief 3. Further development of quality management

41 41 42 42

F. Facts and figures

44

Organisational structure The Austrian tax and customs administration is organised in accordance with the principles of new public management and good public governance. The generell tax and customs administrationhas accordingly increased its performance and outcome orientation to position itself as a modern service provider. Its initiatives to promote citizen participation and design incentives make it one of the most innovative and successful administrations in Europe.

1 Audit unit for large traders (divided into management and the following team areas: organisation, audit teams, collections, specialist unit) 1 Tax Investigations unit (divided into management and the following team areas: organisation, audit teams, collections, functional area) 1 Financial Police unit (divided into management and the following team areas: organisation, financial police teams, specialist unit)

The generell tax and customs administration is comprised of the Austrian Federal Ministry of Finance (divided into sections, groups and departments) and the following organisational units of the Tax and Customs Coordination Office (Steuer- und Zollkoordination – SZK), which are responsible for management and support: 39 tax offices (divided into management and the following team areas: organisation, infocentre, general assessment, business assessment and auditing, tax collection, specialist unit incl. criminal matters) with 69 locations and approximately 7100 employees 1 Tax Office for Fees, Transaction Taxes and Gambling (divided into management incl. official gambling experts and the following team areas: organisation, infocentre, customer team for fees, transaction taxes and gambling, federal concession auditing, tax collection, specialist unit incl. criminal matters) 9 customs offices (divided into management and the following team areas: organisation, customer team, business auditing, customs investigations, tax collection, specialist unit; some customs offices also have special competence centres, such as intellectual property rights in connection with counterfeit goods) with 65 locations and approximately 1600 employees

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B. Our key responsibilities Our main responsibility is to safeguard the financial interests of the Republic of Austria and the European Union by collecting taxes and contributions. These taxes and contributions are for the good of everyone, they are used to provide funding for government structures. The tax administration is responsible for collecting the taxes and contributions required by Austrian federal law and for issuing family allowances and other payments. In accordance with the principal of equal taxation, we ensure that a fair competitive environment exists in the economy and provide Austrian citizens and businesses with assistance in tax matters.

The customs administration acts as part of the European Customs Union. In addition to customs clearances and levying Community taxes, one of the key responsibilities of the customs administration is to support the economy and the smooth flow of international trade using the controls required to protect the health and safety of citizens. Veterinarian measures and controls for the protection of endangered plant and animal species round off the custom administration‘s area of responsibility.

Note: Information on all locations of the Austrian financial administration including opening hours is available at www.bmf.gv.at > Offices and Authorities

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Overview of strategy and objectives The medium and long-term objectives of the Austrian Federal Ministry of Finance are stated in the ministry‘s strategy and include the following areas: Tax strategy: strengthen the business sector to ensure future tax revenues Budget and economic policy strategy: achieve success via growth and stabilisation Efficient administration: use innovation to be one of the best Financial and capital market strategy: use stable finances to support the upswing Global involvement: an international perspective

This strategy forms the basis for setting annual targets and the performance contract. The detailed structure of the objectives is determined in a joint process by the Federal Ministry of Finance and the tax offices, customs offices and federal units responsible for operational implementation. The measures implemented to achieve the objectives can be freely chosen in accordance with applicable frameworks and standards. Six strategic objectives were defined for 2013 and specified in detail using main focal points and performance and development targets. The performance targets concern the main focal points for routine duties, while the development targets provide stimulus for structuring and further development of duties and activities. Defined measurement variables are used as indicators to decide whether targets have been achieved. The principle of outcome orientation always applies when setting targets and represents a key element in the Austrian federal budget reform.

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Management objectives for key responsibilities: Objective I.

Customer relationship management

Objective II. Risk-oriented auditing and control activities Objective III. Timely and accurate tax collection Objective IV.

Protecting society and the economy

Objective I. Customer relationship management Customer relationships should be managed so that citizens and businesses submit their tax returns and customs declarations voluntarily, in the correct amount and at the proper time, satisfy their other obligations, and, last but not least, exercise their rights.

Ziele zur internen Weiterentwicklung: Objective V.

Employee orientation

Objective VI. Organisation development

Our motto for 2013: Effective Networking Many projects and measures from the previous two years were continued under this motto. New priorities were also set. In addition to the expansion of cooperations and networks in the interests of good public governance, cooperation across offices was also promoted.

Main focal points: Development and implementation of measures to increase tax and customs compliance and improve ethical tax behaviour Optimisation of customer contact with a special focus on telephone contact (optimal availability, service orientation, information quality) Development and expansion of networks with other administrations, interest groups, citizens and businesses in the interests of good public governance Modern customer communications As a service-oriented and customer-oriented administration, communications with citizens and businesses is an important factor for the success of our organisational units. The Austrian tax and customs administration aims to use wide-ranging reforms to steadily improve the services it offers. The organisation as a whole is therefore also attempting in the interests of public governance to meet customer expectations. A major part of the contact between citizens and the tax and customs administration takes place in connection with employee assessments and processing times. An average of 17 calendar days was required to perform an employee assessment in 2013, i.e. from receipt of the return to issue of the notice. Telephone calls are the most frequent type of customer contact. A great deal of attention is therefore paid to such calls and the average call waiting time or dropout rate is continuously analysed. A total of 5,880,930 telephone calls were recorded in 2013. The highest monthly value was recorded in March, which had more than 660,000 calls.

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FinanzOnline

Note: Information concerning the area of Family & Taxes is available at www.bmf.gv.at/familie

Thankfully, many citizens have made use of the customeroriented services that the government offers via FinanzOnline. With more than 3 million users and 12.8 million employee assessments submitted electronically since introduction of the application in 2003, FinanzOnline is one of the best established and modern e-government solutions in the world. The mobilephone signature app also recorded a considerable increase from 69,014 users in 2012 to 106,754 in 2013.

FIT

At the annual Young Entrepreneur Day in Vienna, new business founders could personally obtain important information on running a successful business.

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Familie & steuern 24. – 28.6.2013

Broad range of informational events Providing a broad range of information to citizens is very important to the Austrian tax and customs administration and helps maintain the high level of ethical tax behaviour in Austria. A large number of events were held for a variety of target groups and topic areas in 2013.

Tax Office Information Days (Finanzamt Informationstage – FIT) For the first time in June 2013, experts from the financial administration dedicated a week to providing valuable tax tips in the area of „family and taxes“ in all tax offices in Austria. 14

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Apps Apps permitting quick and easy access to information recorded a particularly large number of downloads. The Ministry of Finance app has already been downloaded 40,000 times, the newer customs app close to 18,000 times.

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Each year on the Austrian national holiday, the financial administration presents information on its many responsibilities to the many visitors to the Heldenplatz in Vienna.

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Note: Information on FinanzOnline is available at www.bmf.gv.at > E-Government and in the new folders at www.bmf.gv.at > Publications > Brochures and Guides

At career information events such as the „Gewinn Info Day“ in Vienna, the „Youth and Career“ fair in Wels or the „Best³“ event in Graz, the focus was primarily on students. The „tax assistant“ training program attracted particular interest.

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Another campaign focusing specifically on seniors was implemented in September 2013. This campaign also included information events for seniors on FinanzOnline. The goal was to make seniors more aware of the benefits and advantages of FinanzOnline. A step-by-step explanation was provided on how to use FinanzOnline for employee assessments along with important information on registration, entering data and data protection. Service campaigns were also carried out in cooperation with the Austrian Seniors Association (Seniorenbund), Tax office employees answered questions concerning employee assessments and FinanzOnline in the association‘s district offices for Eastern Austria and Vienna. Information on completing the form and deducting expenses was provided to help seniors submit their employee assessments.

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Trade fairs The Austrian Federal Ministry of Finance made many presentations to the broad public in a variety of trade fairs in 2013 as part of its efforts to provide comprehensive service by offering information and assistance to citizens and businesses.

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Comprehensive cooperations

Contact committee

Although it is important to perform risk-oriented audits of companies as a general preventative measure, it is also possible to work together towards success as partners by providing services aimed at specific target groups – with the long-term goal of improving ethical tax behaviour.

A large number of contact committees are established every year, for example with the Austrian Chamber of Public Accountants and Tax Advisors, the Austrian Chamber of Labour (Arbeiterkammer – AK), Austrian Federal Economic Chamber and Federation of Austrian Industries.

First Entrepreneurial Year

The goals of the contact committees range from the exchange of information, strategic development and identification of enforcement problems, to coordination of information policies.

Financial administration employees acted as mentors for more than 1,800 young entrepreneurs as part of the „First Entrepreneurial Year“ (Erstes Unternehmerjahr) in 2013. The goal was to provide information and support right at the start of their entrepreneurial activities in order to ensure that young entrepreneurs fulfil their obligations and know their rights. Building up a relationship of trust at this early stage promotes collaboration and communication between entrepreneurs and the tax and customs administration. In addition to service considerations, the tax registration of new businesses is also important from an anti-fraud risk perspective. A total of 12,693 official first visits were made to businesses nationwide by tax office employees in the previous year. Note: Important tax information for young entrepreneurs is available in the „Self-Employment Guidebook“ (Selbstständigenbuch) published by the Federal Ministry of Finance at www. bmf.gv.at > Publications > Brochures and Guides

Tax ombudsman office

Representatives from the Austrian Economic Chamber (Wirtschaftskammer – WKÖ), Federation of Austrian Industries (Industiellenvereinigung – IV), Austrian Chamber of Public 16

A qualified and experienced tax advisor was appointed tax ombudsman and acts as a link between taxpayers and the financial administration. Problems and misunderstandings can often be solved simply by translating specialised vocabulary into simpler words. The tax ombudsman therefore acts quickly and unbureaucratically as an intermediary between the different positions in each case in order to find constructive solutions acceptable to both sides.

The satisfaction of taxpayers is important to the financial administration. Transparency and verifiability of the uses of tax revenues is an important requirement for a fair and sustainable tax system, and for the acceptance of such a system.

Accountants and Tax Advisors (Kammer der Wirtschaftstreuhänder – KWT) and the University of Vienna were involved in development of the project. HM uses a tax control framework that is based on risk analysis and maintained on a cooperative, partnership basis. Cooperative development of the tax control system is the focus of regular meetings during the ongoing HM process. One of the key objectives of HM, namely timely and legally accurate collection of taxes, can be best pursued in this fashion.

Horizontal Monitoring (HM) Following the international example, large companies also have the opportunity to request supervision on an advisory basis in partnership with the Austrian tax and customs administration. The Horizontal Monitoring pilot project was started for this purpose in November 2011.

With this in mind, the Austrian Federal Ministry of Finance appointed a new tax ombudsman in the summer of 2013, to provide citizens with comprehensive personal service for all tax matters, large or small.

The number of participating companies increased to 15 in 2013. These are currently at a variety of different stages in the HM process. Six of the companies have already signed the „Declaration for Participation in the HM Project“. For companies, participation in HM increases planning and legal security and reduces compliance costs. In addition to timely and legally accurate tax collection, the tax and customs administration expects that it will be able to shift personnel to risk areas over the medium term.

Overview of results The measures performed in the previous year made a significant contribution to increasing tax compliance under the motto of „Effective Networking“. The measures implemented ranged from improved telephone availability for the approximately 5.9 million calls received to a variety of measures related to individual companies and sectors. These include the more than 1,800 companies mentored as part of the „First Entrepreneurial Year“ initiative and the companies receiving their official first visits. The goal of this approach is to build customer relationships that benefit both businesses and the administration Businesses obtain legal certainty promptly, and the tax and customs administration is able to make targeted use of its resources. The projects and advisory days also contribute to transparency and an understanding of the activities of the administration. Many citizens made a decision to use the electronic FinanzOnline service for the first time in 2013. As a result, more than 3 million citizens are now taking advantage of the possibilities offered by this modern form of customer relationship. Even though the total number of assessments rose again to almost 3.7 million returns in the previous year, employee assessments were performed in an average of 17 calendar days. The new tax ombudsman appointed in 2013 added another point of contact between taxpayers and the tax and customs administration.

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Objective II. Risk-oriented auditing and control activities Implementing uniform, risk-oriented auditing and controls ensures equal taxation, combats the shadow economy and protects honest business operators. Main focal points: Further development of risk management (compliance risk management, risk indexing, data mining, sector audits, local risk management, customs control strategy) Integrated efforts to combat tax evasion and tax fraud (from detection, assessment, levying and collection, to criminal prosecution), possibly making use of international administrative assistance Optimisation of general prevention and special prevention by using a wider range of audits (use of situation-oriented and target group-oriented supervision and control measures)w Main focal points for audit measures: – Implementation of the Austrian 1st Stability Act of 2012 (1. Stabilitätsgesetz 2012) – International matters (incl. tax agreements with Switzerland and Liechtenstein) – Input tax structures related to buildings

the financial administration and the anti-fraud unit a comprehensive overview of existing risk areas, both internal and external.

Forward-looking: Networking of tax and customs Internal risks primarily concern gaps in internal processes that allow false returns and applications to be used to avoid controls and obtain tax benefits (lower tax burden, unjustified payments, delayed tax payments). External risks relate to taxpayer behaviours that are aimed at reducing the government‘s tax claims or using fraud to obtain unjustified payments that have a negative effect on the budget.

The Federal Ministry of Finance‘s strategy is to perform timely identification and monitoring of high-risk areas and make targeted shifts of resources into these areas. Ensuring equal taxation, avoiding distortions to competition and securing tax revenues are therefore key objectives. A general risk management concept was developed in order to meet these requirements. A risk map is the first major step in this direction. The risk map provides the management of 18

Comparison of company export data Deliveries to countries outside of the EU are exempt from value-added tax if export records exist, i.e. the goods have actually left the EU. The customs administration uses an electronic procedure to record exports to third countries, but this information was not available to the business auditing units of the tax offices. Following extensive preparatory work, a report of customs export data can finally be prepared and linked to the accounting records of an audited company using the ACL auditing software program. The result: the system is now in use throughout Austria and allows all of the exports of a company with export records to be determined quickly.

Prevention of fraud scenarios

Targeted: Further development of risk management The financial administration is regularly confronted with new challenges due to new and changed areas of responsibility, a rapidly changing environment and organisational and personnel-related requirements.

regional and local risk analyses that can be used as a basis for effective anti-fraud measures.

New positioning: Anti-fraud coordinators in the tax offices In order to strengthen anti-fraud efforts, full-time anti-fraud coordinators (AFCOs) were established in the tax offices in the middle of 2013. The AFCOs in regional management and the tax offices are responsible for effective anti-fraud measures in their areas of responsibility. They also act as internal and external communication hubs for forwarding information to other regional or local AFCOs and for cooperation with external institutions or other authorities. In addition to the five AFCOs in the various regional managements, there are now 40 full-time AFCOs in the tax offices. They are aimed at further strengthening anti-fraud efforts, in particular performing high-quality

Large-scale import VAT fraud provided the stimulus for another project. Goods deliveries are exempt from import VAT if the goods are shipped to another EU country after being imported to Austria. In cases of fraud, the goods remain in Austria or the delivery is made to a dummy company in another member state – in both cases the VAT is evaded. The Graz Customs Office and Tax Office Graz Stadthave developed a system that can check the many requirements needed for tax exemption. This has already allowed a number of false reports to be detected and the taxes claimed. Input tax refund procedure for foreign companies Foreign companies can use an input tax refund procedure under certain conditions to apply for a refund of input tax. The Tax Office Graz Stadt has sole responsibility for such refunds. Around 18,000 VAT assessments and 70,000 requests for input tax refunds are processed each year. The office also handles new registrations and answers queries from the European Union and third countries, often in the English language. This „day-to-day business“ results in annual refunds of approxi19

mately EUR 1 billion to foreign companies. The risk-based selection of audit cases for the Large Company Audit unit, which is responsible for auditing foreign companies, requires business understanding and the ability to deal with complex situations. Complex cases involving multiple companies in different countries, often using „tax-reduction“ structures in „exotic“ countries, generate claims amounts in the millions that create labour-intensive challenges for employees in the tax collection and specialist units. Note: The brochure „Information on the Value-Added Tax Number“ provides extensive information for entrepreneurs on the topic of VAT numbers and foreign and domestic deliveries. Available at www.bmf.gv.at > Publications > Brochures and Guides Networking: International exchange of information on social fraud An information exchange takes place each year under the „Fiscalis“ programme between experts from the financial administrations of the member states of the European Union. One of the main focal points each year is anti-fraud efforts. Foreign participants once again showed great interest in Austrian anti-fraud measures in 2013, and two working visits on the topic have already been offered. Case studies are mainly used during the visits to explain different procedures, measures and focal points, and best practices are presented. Effective: Fighting fraud with cooperation between authorities

cludes the coordinated use of special task forces and targeted actions, as well as employee training and advanced training in the fight against organised crime.

Operational gambling audits In order to effectively meet statutory responsibilities in the area of gambling, official actions initiated by the Austrian Tax Office for Fees, Transaction Taxes and Gambling (Finanzamt für Gebühren, Verkehrsteuern und Glückspiel – FAGVG) regularly take place in gambling operations in cooperation with the regular tax offices, financial police, state criminal investigation offices and district administrative authorities.

Close cooperation between the Tax Investigations unit and the Public Prosecutor‘s Office for Combating Economic Crimes and Corruption The Tax Investigations unit is involved in the fight against systematic and organised tax fraud and the detection of commercial tax evasion by proactively identifying and combating fraud patterns and the fight against cross-border tax and social fraud. Enforcement measures, such as building searches, telephone monitoring, observation and seizure are often needed to perform these duties. These enforcement measures are performed on behalf of and in close cooperation with domestic and foreign public prosecutors. Close cooperation exists, in particular, with Austria‘s main public prosecutor for economic crime, the Public Prosecutor‘s Office for Combating Economic Crimes and Corruption (Wirtschafts- und Korruptionsstaatsanwaltschaft).

The Tax Investigations unit has implemented and continues to implement a variety of measures to further strengthen this cooperation. Case-based meetings take place regularly to discuss both particular cases and specific investigatory measures.

The Operational Gambling Audit unit (Operativen Glücksspiel Prüfung – OGP) of the FAGVG is responsible for performing such official actions. The OGP consists of auditors with many years of experience in performing operational tax supervision measures. In 2013, the OGP performed investigations concerning gambling machines and live gambling in 250 venues and initiated enforcement of seizure orders with a value of approximately EUR 2 million.

Public prosecutors use the investigation findings to decide on further measures, such as interventions restricting fundamental rights and freedoms. At times, the public prosecutors actively take part in operations by the Tax Investigations unit. This shows that the best possible investigation results can only be obtained with close case-based cooperation. In addition, the findings and fraud patterns gained from the cases are discussed in training and informational events, and strategies for joint anti-fraud measures are developed.

Long-term cooperation with social insurance institutions Many cooperations with the Austrian Federal Ministry of the Interior The Austrian Federal Ministry of Finance and Austrian Federal Ministry of the Interior have had numerous cooperations and joint projects for many years in the fight against illegal gambling, money laundering, corruption and illegal immigration and for stricter controls for the Austrian NoVA fuel consumption/ pollution tax. The cooperation between the two ministries in20

The tax and customs administration and social insurance institutions have cooperated for many years on joint audits of all wage-dependent taxes and levies, in which a single audit is used for all wage-dependent taxes and levies. The tax and customs administration performed 11,594 audits in calendar year 2013, and took advantage of the synergies from the cooperation to develop a completely new auditing software program for day-to-day auditing activities. 21

Overview of results The Austrian tax and customs administration expanded its risk management in the area of risk-oriented auditing and control activities in 2013 and made a major contribution to ensuring equal taxation and in particular to the fight against the shadow economy and tax fraud by creating new positions for anti-fraud coordinators in the tax offices. The tax and customs administration performed a total of around 74,000 field audit measures in 2013, such as collections, business audits, large company audits, VAT, transaction tax, gambling, tax investigation and customs audits, and joint audits of wage-dependent taxes and levies. The tax offices performed a total of 81,734 field audit measures in 2013. These included business audits, special VAT audits, collections, follow-ups, official first visits, joint audits of wage-dependent taxes and levies, foreign company VAT audits and summary reports. The Large Company Audit unit and Tax Investigations unit also performed audit measures. The cooperation between the Graz Customs Office and Tax Office Graz Stadt provides a good example of effective networking within the tax and customs administration. This and other networking projects have shown how cooperation can increase the effectiveness of audit and control measures. This is just as true for external and international cooperations as for internal cooperations.

Objective III. Timely and accurate tax collection Timely and accurate assessment, levying and collection of taxes ensures equal application of the law. Main focal points: Optimising claims management to reduce tax arrears, in particular by timely and appropriate use of existing instruments, such as arrears analysis, expediting seizure measures and cross-team and cross-office cooperation. Further development of quality and knowledge management. Expansion of the internal control system. From risk analysis to forward-looking measures The targets set for the tax and customs offices specify ongoing quality assurance measures for the „timely and accurate tax collection“ objective, with case selection performed based on both national focal points and office-specific criteria. The following areas were chosen as focal points:

processing times and ensure that processing times are almost the same nationwide. Quality management Quality management is an essential part of the management system of the tax and customs administration. A total quality management (TQM) system has been used successfully since 2005. This consists of a comprehensive quality policy based on the expectations of the interest groups of the tax and customs administration – including society, government and business – and the needs of management and employees. For the purposes of the tax and customs administration, quality means the satisfaction of specified requirements and justifiable expectations. The requirements are specified, in particular, by the rule of law, legislation, regulations and decrees, and the strategy and outcome objectives of the Austrian Federal Ministry of Finance. Fair and equal taxation is the primary objective, in both the legislative and executive branches.

Accuracy of return auditing Taxation of personal motor vehicle imports Recapture of foreign losses and building tax benefits granted upon business closure („Gebäudebegünstigung bei Betriebsaufgabe“). Methods of avoiding double taxation Appeal processing Statements of reasons for official notices Notices of deletion and liability Notices to district administrative authorities Gambling machine revenues In customs, the area of excise taxes and customs inspections Processing time is an indicator of the timeliness of tax collection. The processing time is the time from receipt of a return to issue of the assessment notice. The „LoS“ (PerformanceOriented Management) management information system and appropriate measures can be used to continuously analyse 22

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Quality in the tax and customs administration is primarily based on the following criteria: Equal application of the law Equal taxation Verifiability Legality Timeliness Proportionality However, in addition to the technical and legal aspects of quality, subjective criteria such as security, reliability and respectful behaviour also play an important role.

quality management system provide support for employees and management and are intended to create technical and legal certainty when tasks are performing. Audits are used to determine whether activities and results satisfy defined requirements and whether these requirements are suitable for achieving the objectives that have been set. Potential improvements are identified at the same time using systematic and methodical principles and employees are provided support directly on-site at the workplace. The focus is on equal application and interpretation of the law and efficient performance of processes.

Objective IV. Protecting society and the economy The tax and customs administration is also responsible for enforcing competition rules for the free movement of goods and performing controls for the protection of people, animals, plants, the environment and cultural assets.

Main focal points: Comprehensive controls implemented as general preventative measures in the area of tax supervision and regulatory policy based on financial police powers Targeted measures to prevent violations of prohibitions and restrictions (including cash) falling within the powers of the customs administration Promotion of effective anti-fraud measures by, for example, optimising cooperation within the tax and customs administration and between ministries

The steady improvement of quality management is aimed at firmly establishing the principle of a learning organisation and a continuous improvement process. The instruments of the

Overview of results The key responsibilities of the customs and tax offices include timely and accurate assessment, levying and collection of taxes to ensure equal application of the law. A number of steps were therefore taken in 2013 to ensure that this principle was satisfied. These include technical and legal quality management measures. This was, for example, ensured for the 7,460 quality assurance measures performed, almost 600 more than the target that was set. An analysis of the ratio of outstanding enforceable and processable tax liabilities to tax revenues shows that the administration was once again able to ensure timely levy and collection of taxes in 2013. The Austrian financial administration is one of the administrations with the lowest ratio of enforceable arrears to tax revenues and is also one of the few administrations that has been able to reduce this ratio over the long term.1 An international comparative study that compares the cost of administration to revenues shows that the Austrian financial administration is one of the administrations with the lowest administrative costs.2

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cf. OECD (2013), Tax Administration 2013: Comparative Information on OECD and Other Advanced and Emerging Economies, Table 6.16 cf. OECD (2013), Tax Administration 2013: Comparative Information on OECD and Other Advanced and Emerging Economies, Table 5.3

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Counterfeit goods

Protection of endangered species

The Austrian customs made a respectable 98,440 seizures of counterfeit goods in the previous year. The goods had a value of EUR 5.6 million, based on original price. Although counterfeit goods were mainly seen in the area of luxury goods twenty years ago, children‘s toys, sports articles, software, mobile phones, music, movies, automobiles and replacement parts, food and beverages, machinery, factory equipment, airplane parts and medicine are now also being counterfeited.

Most people have to travel to exotic countries in order to experience coral, snake wine, Chinese three-keeled pond turtles, Indian costus root, chameleons, ivory or orchids. Employees working at the customs office at the Vienna Airport, however, receive such things delivered „free workplace“, as all of this and more was seized in 2013 due to violations of the CITES convention (Convention on International Trade in Endangered Species of Wild Fauna and Flora). The seizure of 60 birds in the luggage of a Czech traveller coming from the United Arab Emirates drew particular attention, including media attention. Most of the highly endangered birds were already dead, some had contracted the bird flu virus.

When faced by what looks like a good bargain, in particular the risks to health associated with counterfeit goods in these product groups are often not taken seriously. The potential injuries that could be caused by counterfeit products simply cannot be ignored. These range from allergies due to cheap, toxic dyes in counterfeit clothing, eye injuries due to counterfeit sunglasses without UV protection, chemical skin burns from counterfeit washing detergent or counterfeit personal care products, injuries from exploding mobile phones and counterfeit batteries, and injuries to children from counterfeit children‘s toys that do not meet applicable safety requirements and quality standards. The risks associated with counterfeit products are at times quite serious and make the purchase of counterfeit goods much more than the minor offence it is often considered to be. As before, the product group with the most seizures was counterfeit medicine, which accounted for 25 percent of all counterfeit goods in 2013. Approximately 15 percent of the medicine on the market is counterfeit. Counterfeit medicine is not a bargain, it damages your health. Product counterfeiting is harmful to both people and the environment. Apparent bargains on the Internet are enticing but could have serious health effects in the end. This makes it even more important to seize these dangerous counterfeit medicines when they are imported. Our seizure rate for counterfeit medicine makes us number one in the EU. 25% of all medicine seizures in the EU are made by Austrian customs. Note: More information is available in the annual counterfeit goods report at www.bmf.gv.at > Customs > Counterfeit Goods

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The illegal trade in living plants and animals, trophies and products like crocodile-leather watch bands continues to boom, however, due to strong demand and high profit margins. Note: More information on endangered species is provided in the „Endangered Species on Holidays“ („Artenschutz im Urlaub“) report prepared each year in cooperation with the Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Management, and the „Customs Info“ (Zoll-Info) report prepared by the Austrian Federal Ministry of Finance, both of which are available for download at www.bmf.gv.at > Publications > Brochures and Guides. The fight and penalties against money laundering „Money laundering“ refers to the movement of money from illegal sources into legal economic and financial circles. The phenomenon is international and can only be successfully fought by good, cross-border cooperation between authorities. When a suspicions of money laundering occurs, legal survive obligation is in place, applicable for banks, insurances, lawyers, auditors, and so on. All authorities must report cases of suspected money laundering to the Austrian money laundering unit (Geldwäschemeldestelle). It is located at the Austrian Federal Criminal Police Office (Bundeskriminalamt – .BK) in Vienna and in addition to money laundering also combats terrorist financing. The .BK analyses the reports and forwards them internationally to Europol and Interpol. As the Austrian Financial Intelligence Unit (A-FIU), it is also a member of the Egmont Group, the worldwild money laundering units. Since 2011, criminal law no longer allows bank secrecy to be misused to conceal serious tax fraud and subsequent money laundering. Cash controls are an important factor in discovering money laundering. Individuals entering or leaving the EU with EUR 10,000 or more in cash must report this to customs. In the first half of 2013 alone, customs issued around 2,000 cash

control reports for EUR 2.9 billion. These included 90 money laundering reports to the A-FIU for undeclared transports with a total value of EUR 3.8 million and 30 control reports for Austrian taxpayers that were sent to their respective tax offices. The Swiss banking system and Liechtenstein tax paradise have been particularly attractive for decades due to lucrative and, above all, „safe“ options for investing assets. As a result, the Austrian customs administration was already aware of regular massive flows of capital into these two countries in the past. Cash transfers were particularly prevalent, but could not be stopped due to the lack of foreign exchange provisions. The obligation to declare cash amounts in excess of EUR 10,000 does not appear to have changed the situation much. Unbelievable amounts of cash continue to be transported across the borders into Switzerland and Liechtenstein every day. This last remaining EU external border for road traffic is unique in Austria, since cash amounts otherwise only need to be declared at airport customs offices. Commercial transports completely dominate the cash declarations, with unbelievable amounts of cash being transported over this short stretch of border around 40 kilometres in length for banking (foreign currency returns) and business purposes. A total of 2,710 cash declarations were made (a total of 4,379 in Austria as a whole). EUR 80,300 in fines related to undeclared cash became legally final in the months of January to October 2013. Gold is also regularly imported without a declaration. The customs investigations unit of the Feldkirch Wolfurt Customs Office is currently investigating a number of individuals for five different cases of gold imports in which a total of more than 128 kg of gold bars and 100 Krugerrands were taken across the Austrian or Swiss EU external border. Such discoveries also form the basis for further tax investigations of Austrian residents. Cash controls are therefore extremely important from a fiscal point of view and will therefore undoubtedly remain one of the main focal points of control activities at the EU external border in the future. 27

Overview of results The Austrian tax and customs administration must perform a broad range of duties in order to protect society and the economy. For this reason, it is particularly important to expand and apply effective networking in this area. The successes achieved, for example, by cooperation between the Tax Investigations unit and Public Prosecutor‘s Office for Combating Economic Crimes and Corruption, and in the fight against fraud confirm the value of this approach. These successes in the fight against fraud networks, detection of drug plantations and in the international protection of endangered species would not have been possible without effective cooperation. Significant successes were also recorded in 2013 in the areas of counterfeit goods, money laundering and terrorist financing and in operational gambling audits.

C. Internal development The tax and customs administration considers personnel development and creation of a modern workplace to be key requirements of a responsible employer. This includes, for example, training to become a tax assistant, or organisation development measures that are discussed in more detail in the following two objectives.

Objective V. Employee orientation The promotion of employee commitment, motivation and qualifications makes a significant contribution to the performance capabilities of the financial administration. Such development should ensure the following: Main focal points: Needs-appropriate assignment of staff Promotion of optimal, cross-organisation cooperation Promotion of measures for the equal treatment of men and women Promotion of occupational health and safety Successful training program The Austrian tax and customs administration makes its contribution to youth training. The financial administration once again advertised 60 vocational training positions for tax and administrative assistants in 2013. This gives interested youth the opportunity to enter a vocational program with one of the most modern administrations in Europe. The occupation of tax assistant belongs to the family of commercial administration vocational training programs. In addition to the area of commercial administration, training also focuses on Austrian tax law. This broadly diversified training opens doors for the trainees in both the public and private sectors, in particular at auditing and tax consulting companies. A jury of the Economic Chambers of Upper Austria granted the 28

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Upper Austria tax offices the INEO award in 2013 as a model training operation, with special mention given to the Linz training centre. Training, however, is not the only thing offered by the tax and customs administration. In 2013, around 40 trainees were given positions in the financial administration after successfully completing their three-year training programme. Note: The Austrian Federal Ministry of Finance document „Now You Are at the Steering Wheel!“ (Jetzt bist Du am Steuer!) provides more information on vocational training programmes at the Ministry of Finance and is available at www.bmf.gv.at > Publications > Brochures and Guides.

Comprehensive management development

Talent management for employee development

15 employees in the Mid Region took part in the development programme for potential team leaders in 2013. The ten female and five male employees were chosen using an application procedure and involvement of the regional personnel development manager.

Talent management is aimed at ensuring technical and general skills, maintaining employee motivation and promoting career development. Assigning employees to a job profile and service class makes it possible to perform a clear assessment of occupational development needs. Talent management gives employees desiring further development options a look at the range of occupations in our ministry.

The development programme includes a theory section and a practical section.

The latest measurements show that the Ministry of Finance has a current average WAI point score of 38.18, which is in the good range. This is slightly better than the first measurement, which was improved by targeted health management measures.

Infocentre work analysis A sophisticated analysis of work flows and working conditions was performed with the aim of reducing preventable stress and optimising the handling of stress in infocentres. The findings of the work analysis were used to prepare the „Infocentre Recommendations“ paper (Empfehlungspapier Infocenter), which will be implemented starting in 2014 to implement improvements for employees.

The theory section consists of four three-day modules on the following topics: „The Role of Management“, „Communication and Conflict“, „Managing Employees and Teams“ and „Shaping the Future“. The practical section takes participants on a visit to the management of the tax or customs office for five days. Another 15 days are spent in a team at the tax or customs office, where the participants become familiar with the tasks of management. The second practical section – another five days – takes place in the Tax and Customs Coordination Office.

Work-Ability-Index (WAI) – WAI measurement using work ability coaching

Health report As an employer, it gives us the possibility to actively manage personnel resources and promote the internal mobility of employees towards strategically important organisational areas. Promotion of work ability

Recovery Check

A highly detailed health report was published for the financial administration for the first time in 2013. Sports and health have been an important focal point of employee development in the tax and customs administration since that time. „Stay Healthy“ (G‘sund bleiben) is an internal ministry initiative offering a wide range of health-promotion measures that can be used by all employees free of charge.

An Internet-based tool developed by the Institut für Begleitforschung in cooperation with the University of Graz reflects a person‘s state of stress or recovery, thereby allowing an assessment to be made as to whether the person is currently in dynamic balance between stress and recovery. This tool can be used to provide support in the area of mental health. The results of more than 1500 measurements performed to date (in tax offices, customs offices, the Tax and Customs Coordination Office and Large Company Audit unit) confirm the WAI findings and indicate a need for action in „age-critical“ areas of activity in particular.

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Overview of results A key human resources policy measure was achieved in October 2013 with the conclusion of a new master agreement for additional personnel transfers with the Austrian postal service, A1 Telekom and the Austrian Federal Ministry of Defence and Sports. Our extensive range of training opportunities is aimed at all employees in the ministry, ensuring that we achieve the best progress possible as a knowledge-based organisation. Slightly more than 300,000 advanced training hours (i.e. not including basic training) were completed in the Ministry of Finance in 2013, corresponding to an average of 27.15 hours of advanced training per employee. Last but not least, numerous measures, such as recovery checks and WAI measurements, were also used to address the needs of employees and promote employee work ability, motivation and commitment over the long term.

Objective VI. Organisation development An innovative, outcome-oriented and efficient organisation ensures that it can optimally fulfil its responsibilities and meet the challenges of the future. Main focal points: Ensure continued implementation of the 2nd stage of the budget reform Further improvements in the fight against fraud and financial crime Uniform IT support for all anti-fraud units Improvement of cross-organisation cooperation Efficiency improvement: Financial police made into a national organisational unit The financial police are responsible for controls that ensure fair conditions for all participants in the economy, thereby safeguarding the financial interests of the Republic of Austria. The economy and those who regularly and properly pay their taxes should not be burdened by fees, but should instead be protected.

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The financial police should work to safeguard the interests of labour, make Austria an attractive location for business, and ensure equality of opportunity by preventing unfair competition due to advantages gained by illegal employment and social insurance and tax fraud. This also serves to safeguard wage and working conditions, as the social implications of illegal employment cannot be ignored. The lack of health and casualty insurance, for example, represents a enormous risk for the illegal employees themselves. In addition, low wages in the form of wage and social dumping endanger the Austrian labour market. Similar to the Tax Investigations unit and Large Company Audit unit, the Financial Police has been a separate authority since 1 July 2013. Now separated from the local tax offices, this new national organisational unit combines administrative and technical supervision. In terms of organisational structure, the Financial Police therefore acts as a unit of the tax authority (tax supervision) and, together with the Tax Investigations unit, as an operative arm in the fight against fraud. This change will especially increase the efficiency of anti-fraud efforts. Uniform management across Austria and more flexible

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use of personnel now allow more targeted regional and national actions. Networking will also be critical for achieving needed successes in the future. Joint information acquisition, knowledge sharing and cooperation are essential. The Financial Police therefore approach other authorities and institutions for cooperations and are available for cooperative action.

Note: Extensive information and additional facts and figures on the Financial Police are available in the brochure „Financial Police – More Security and Fairness“ (Finanzpolizei – Mehr Sicherheit und Fairness), available at www.bmf.gv.at > Publications > Brochures and Guides. Central location: Wien Mitte Tax Centre

Businesses in the eastern part of Austria are particularly affected by the entry of European firms following expansion of the EU. Differences in wage levels create an incentive for criminal elements in the business world to commit wage and social dumping to the detriment of taxpayers and their own employees. The Financial Police work on this in particular with the Economic Chamber of Lower Austria and Burgenland and other competent authorities, such as the business registration authorities in these states.

After more than five years of planning and preparation, eight of the nine tax offices and part of the Large Company Audit unit completed their move to new premises at the Wien Mitte Tax Centre (Finanzzentrum Wien Mitte) at Marxergasse 4, 1030 Vienna, by the middle of March 2013. Except for Vienna Tax Office 2/20/21/22, which remains at its location in Kagran, all Vienna tax offices are now united under a single roof. The goal was to find a modern, up-to-date building structure that could adjust to the dynamic working environment in the tax and customs administration and above all permanently improve the service provided for the citizens of Vienna over the medium term.

The Wien Mitte Tax Centre offers room for more than 1,800 financial administration employees in 35,000 m² of office space on six storeys in five building sections. Located directly over the Wien Mitte railway station, subways U3 and U4 and the S-Bahn are easily accessible.

Fees, Transaction Taxes and Gambling also took up their new quarters on Marxergasse.

The new Wien Mitte Tax Centre is also a model in terms of energy efficiency and barrier-free design. The centre meets the requirements of energy performance certificate class B, which corresponds to a low energy building. All of the measures for barrier-free design were developed and tested with the Austrian Association of Persons with Disabilities (Österreichischer Zivilinvalidenverband).

At the same time that the change of premises was taking place, another organisation development project was implemented to take advantage of major potential synergies resulting from combination of the Vienna tax offices.

The common infocentre (special responsibility of Vienna Tax Office 8/16/17 for all Vienna tax offices) at the corner of Marxergasse and Gigergasse is also a new feature of the Wien Mitte Tax Centre. A common telephone number also makes customer contact easier. In addition, since 10 December 2012, all Vienna locations have offered extended opening hours until 6:00 pm on Thursday.

The internal organisational structure of the tax offices was also changed as a result of the move. The previous organisational structure and process organisation were further optimised by merging small units that were distributed among the tax offices, thereby creating the following special responsibilities:

The range of services offered in Vienna by the tax and customs administration was also expanded at the beginning of 2013. Both of the remaining locations can serve any citizen, taxpayer or company in the entire Vienna jurisdiction. This means that any service desk, independent of where it is located in Vienna, offers the same range of information, regardless of the tax office having jurisdiction. This change represents another step in the direction of increased customer-orientation, greater efficiency and the use of synergies by the tax and customs administration. The concentration of Vienna tax offices at a central location is aimed at permanently improving the administration‘s customer service orientation for the citizens of Vienna. By optimising management processes and making use of synergies, the Austrian Federal Ministry of Finance is actively contributing to the realisation of the objectives of the administrative reform. As part of the largest move ever performed by the tax and customs administration, the 120 employees of the Tax Office for

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Use of synergies: Organisation development of the Vienna tax offices

Efficient distribution of work as a result of new special responsibilities

Joint audit of wage-dependent taxes and levies Financial police Financial crime authority and Infocentre These special responsibilities were distributed as follows effective 1/1/2013: Responsibility for joint audits of wage-dependent taxes and levies for districts 1 and 23 and under § 15 of the Austrian Tax Administration Organisation Act (Abgabenverwaltungsorganisationsgesetz – AVOG) was assigned to Vienna Tax Office 1/23 Responsibility for joint audits of wage-dependent taxes and levies for the remaining districts of Vienna was assigned to Vienna Tax Office 12/13/14 Purkersdorf Responsibility for financial police and the central coordination office was assigned to Vienna Tax Office 6/7/15 (an independent organisational unit since 1/7/2013) Infocentre responsibility assigned to Vienna Tax Office 8/16/17 Criminal matters office and financial crime records assigned to Vienna Tax Office 9/18/19 Klosterneuburg 35

Particular attention was paid to optimising management processes and workflows as a result of the merger of locations. The following organisation development objectives were therefore pursued in connection with the Wien Mitte Tax Centre. Use of synergies and realisation of cost savings based on the possibilities offered by a common location (in particular by taking advantage of economies of scale and specialisation), target group-appropriate performance of tasks (flexible responsibilities towards citizens in the outside world, efficient internal distribution of work), ensuring optimal functioning of tax offices in the Tax Centre, further development and optimisation of organisational structure and process organisation (core processes, management processes, support processes). In addition, Vienna Tax Office 6/7/15 and Vienna Tax Office 3/11 Schwechat Gerasdorf were combined on 1 July 2013. The new Vienna Tax Office 3/6/7/11/15 Schwechat Gerasdorf now has more than 260 employees. The merger of these tax offices was combined with organisational removal of the regional special responsibility for financial police from Vienna Tax Office 6/7/15, and transfer of the special responsibilities previously held by Tax Office 3/11 Schwechat Gerasdorf – Austrian Family Burdens Equalisation Act (Familienlastenausgleichsgesetz – FLAG) (school books and school trips), „Austrian CSSR Compensation Act“ (Entschädigungsgesetz CSSR) – to Vienna Tax Office 4/5/10.

Forward-looking: Further infrastructure modernisation Many infrastructure measures were also implemented in the various regions of Austria in order to provide modern, up-todate conditions for employees. The following locations were modernised: Bruck an der Leitha (renovation) Ilztal/Gersdorf (modification of traffic control points) Perg (new construction) Schärding (renovation) Landeck/Reute (renovation) Salzburg (renovation) Wiener Neustadt (start of renovation) Eisenstadt (start of renovation and space consolidation) Waidhofen a.d.T (new lease)

Overview of results 2013 was an exceptional year in terms of organisation development. The move of Vienna tax offices to new premises in the Vienna Tax Centre was completed, and the ministry headquarters, Federal Academy of Finance and Tax and Customs Coordination Office were moved. In addition to organisation development changes with respect to locations, changes in responsibilities were also made by concentrating special responsibilities to make optimal use of synergies. The Financial Police has been a separate organisational unit since 1 July 2013, with its headquarters in Vienna and units in all tax offices with general responsibilities. The establishment of a national Financial Police unit is intended to increase the efficiency of the unit in performing its responsibilities and in the fight against and prosecution of tax evasion, social fraud and violations of employment, labour market and gambling provisions.

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D. Social responsibility The goal of the financial administration is to work with all parties concerned to ensure economic order and an economic climate that provides a solid foundation for social interaction. The tax and customs administration helps to ensure a fair competitive environment and eliminate dishonest practices. Equal taxation and equal treatment are important principles; citizens are given guidance on satisfying their tax obligations. The financial administration is also aware of its social responsibility and tries to act as a model in this regard. Among other things, efforts are made to achieve lasting accomplishments in the moral education of children and support for team sports. The support for disadvantaged Austrian athletes stands out in particular with respect to the rest of Europe. The success of this programme can be seen, for example, in the large number of participants at the Winter Paralympics, whose hard work and commitment enabled them to fulfil their (Olympic) dreams.

1. Fair Play: An initiative for compliance and tax compliance To continue safeguarding the financial interests of the country of Austria and its businesses and citizens in the future, the financial administration must change its way of thinking: customary working methods need to be changed and „new ground broken“. Cross-administration cooperation, legal certainty and prompt assistance for taxpayers (instead of ex-post audits) are the order of the day. New values of cooperation have to be established for the long term, based on mutual respect, openness and transparency. Growing levels of trust and responsibility for all parties concerned will create a basis for successful cooperation in the future and further increase ethical tax behaviour. When the discussion turns to „tax compliance“, however, there is one practice that cannot be ignored, namely „aggressive tax

planning“. The aim of this practice is to pay zero or very little tax. Multinational companies, for example, take advantage of tax loopholes created by the lack of coordination between different national tax systems in order to shift their tax burden to low-tax countries. However, it is, not just large corporations. Some small and medium-sized companies also often shamelessly exploit the limits of what is permissible under the law. Under the guise of fictitious self-employment, they circumvent the payroll tax and social insurance requirements of the law. These are only two examples – the range of tax evasion practices is broad, and often highly complex. The public is currently undergoing a polarisation. While many companies are acknowledging their social responsibility and making ethical tax behaviour a top priority, organised tax fraud is flourishing as never before. Taxes are a cost factor and tax planning is one of the most important strategic topics for companies. The boundaries between legal tax planning, aggressive tax structuring and intentional tax evasion are, however, often not clearly defined. The traditional instruments of auditing and penalties are no longer adequate in such cases. In addition to proven auditing and anti-fraud measures, further development and combination of existing risk management tools and use of the latest technologies are also important factors for success. Increased cooperation with other authorities and international organisations – judicial system, police, OECD, FU, European 37

Anti-Fraud Office – is also steadily growing in importance to allow efficient and needs-appropriate deployment of existing resources in known risk areas. Tax advisors and experts, for example, often make fine, hairsplitting arguments, while claiming that it is either legal or illegal, but that aggressive tax planning is not involved. The European Commission and OECD have nevertheless taken a clear position and presented action plans to counter such practices in order to maintain a fair competitive environment outside of Austria as well.

2. Investment in the future: Information for youth and those remaining young at heart

reports on meetings of the EU finance ministers) and explanations of technical matters (for example, the informational video „Where do my tax euros go?“ (Wohin fließt mein Steuereuro?)).

3. Sports Support for top athletes The Austrian Federal Ministry of Finance has been providing support for top athletes (alpine skiing, cross-country, biathlon, nordic combined) since 1952, when support was still in the form of a Customs Police (Zollwache) ski team. The support continued, in spite of the elimination of the Customs Police in 2004, and in 2008 the ministry also established a ski team for athletes with physical disabilities.

the world. The athletes receive adequate time for training and competitions and are trained in the tax and customs administration at the same time and prepared for a future position in the financial administration („career after the career“). The possibility of entering the financial administration at the end of their sports career provides support for both the Austrian Ski Federation in its efforts to maintain its top position in the world, and for the athletes themselves as they follow their exceptional career path. The finance team had a roster of renowned athletes in the 2013/2014 season: Daniel Mesotitsch, Aurelius Herburger, Harald Wurm, Iris Schwabl, Marco Pichlmayer, David Zauner, Philipp Schörghofer, Christoph Nösig, Wolfgang Hörl, Florian Scheiber and Eva-Maria Brem. Implementation of the support programme for ski athletes with disabilities has been highly successful. Austria has many outstanding disabled athletes putting their abilities to the test

School visits – discussions with future taxpayers

not only at the Para-Olympic Games, but also at the World and European Championships and the World Cup. These successes are mainly the result of personal commitment, using the athlete‘s own financial resources and those of the sports club for disabled persons. The Austrian Federal Ministry of Finance intentionally established a sports team for disabled persons as a concrete acknowledgement and expression of its diversity policy. The members of the team for disabled persons are also provided sufficient time for their sports activities, and during periods when training and competition are less intense they are prepared for interesting positions in the tax and customs administration. The Ministry of Finance has a top team of disabled athletes, Roman Rabl, Dietmar Dorn, Thomas Grochar and Christoph Prettner, and a trainer, Manuel Hujara, who was named Trainer of the Year in 2013. He was awarded this title during the Cristall Gala of the Austrian Sports Organisation (Bundes-Sportorganisation – BSO).

During school visits, interactive presentations and discussions are used to discuss questions of all kinds related to taxes with future taxpayers. The target group is youth in the final years of school. The school visits deal with many topics, including in particular the following questions: „Why do taxes exist?“, „What happens to the money?“, or the costs of public services. The students are always very interested and many things that are taken for granted, such as free schooling and doctor‘s visits, suddenly appear in a different light as a result of the visits. Facebook and video portal at www.bmf.gv.at The Austrian Federal Ministry of Finance also networks with outside target groups via its Facebook page at www.facebook. com/finanzministerium. Citizens can communicate directly with Ministry of Finance here and receive up-to-date news and information on services. Video is also increasingly being used as a communication medium. The video portal, which can be accessed via the ministry‘s home page at www.bmf.gv.at, has video clips on a variety of topic areas that provide information on current events (such as

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In order to become a member of the finance ski team, athletes must belong to a team in the Austrian Ski Federation (Österreichischer Skiverband) in the categories of alpine skiing, crosscountry, biathlon or nordic combined. Due to the limit on the number of positions supported, there are no plans to expand the programme to other types of sports. The basic idea of the programme is to provide support for talented young ski athletes on the way to the top in Europe and

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International Customs Ski Competition 2013 The first International Customs Ski Competition (Internationale Zollschiwettkämpfe) for the alpine countries of Germany, France, Italy, Switzerland and Austria was held in 1952. The host country changes every year and it was Austria‘s turn once again in 2013. The beautiful Paznaun valley in the high alpine Silvretta region of the Alps was chosen as a worthy venue for the 60th International Customs Ski Competition. The village of Galtür and its citizens have been a very special partner for the Austrian tax and customs administration for decades. Working together, they have organised many superb events providing optimal conditions for exciting competitions at the highest level.

Ski Competition were created by artists at the Lebenshilfe Landeck organisation for disabled persons. From a sports point of view, the races were firmly in the hands of the French top stars. The cheering was loud for the sole Austrian medal, an outstanding third place won by Harald Wurm, Aurelius Herburger and Daniel Mesotitsch in the patrol competition (Patrouillenlauf), a relay race with cross-country and biathlon skiers that is the ultimate event at the Customs Competition. The highlight of the competition was the night race of the cross-country ski stars, which took place right in the centre of Galtür and was also won by an Austrian, Harald Wurm. Austrian Finance Ski Championship 2013

The medals and trophies for the 60th International Customs The best skiers in the financial administration gathered once again to test their sporting abilities at the 20th Austrian Finance Ski Championship (Bundes-Finanzskimeisterschaften). This traditional sporting event took place in the Katschberg ski area from 13 to 16 March 2013.

E. Outlook We are looking forward to interesting, innovative changes in our challenging areas of activity in 2014. We will continue to implement projects already under way and expand them comprehensively/nation-wide in order to continue offering the best possible conditions for our stakeholders. This section takes a brief look at our objectives and projects.

1. Full assessment for agricultural and forestry land New land assessment values are being set for agriculture and forestry in 2014 for the first time since 1988. Agriculture and forestry assessment values are highly important, as they form the basis for a number of taxes and government aids and for calculating social insurance contributions for farmers.

Doing its best to complete the assessment value updates in 2013 placed a heavy workload on the tax and customs administration. A national tax force was formed of experts from the headquarters of the Federal Ministry of Finance, the Tax and Customs Coordination Office and the tax offices to manage the enormous workload. The task force primarily provided assistance to the tax offices and information transfer. Serviceorientation played a major role. Sophisticated IT solutions were used to pre-fill returns and schedules as far as possible. The parties involved only had to check or update assessed areas and certain data from operations, such as currently assessed alpine areas. Eliminating the backlog was a top priority for the full assessment (Hauptfeststellung), as this creates a basis for the accuracy of the return and notice data for the full assessment and is the only way that pre-filled returns can be sent out. Due to special circumstances in Lower Austria and Burgenland, more than half of all Austrian assessment files are in the Region East (Region Ost). Around 100,000 entry items were completed in 2013. In order to meet the target required by law, a special „Eastern Region Task Force“ was formed, with members from regional management and the tax offices that had the highest numbers of assessment files. This allowed an exchange of information based on practical experience and the development of new ideas and approaches for quick and efficient – but still legally correct – completion of the files. As a result of the neighbourly assistance of other organisational units, great employee commitment and the measures taken by the task force, the ambitious goal was achieved in the end. Around 600,000 agricultural and forestry land assessment notices were sent out for the full assessment in 2014. The new land assessment values will become effective for tax purposes on 1 January 2015, and for social insurance purposes on 1 January 2017.

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Note: Further information on the full assessment of land values is available at: www.bmf.gv.at > Publications > Brochures and Guides > Taxes

2. Telephone project: Technical support for improved service and employee relief The increasing volume of telephone calls is already presenting major challenges for tax office employees and equipment. More than 3.5 million telephone calls are handled annually at the 1st level alone in the tax offices, and the trend is increasing. The seasonal distribution presents another challenge, as more than 40% of the calls occur in the initial months of the year. In metropolitan areas in particular, existing personnel are often no longer able to handle the call volume in a satisfactory

period of time. Since the beginning of 2014, tax offices have therefore been distributing calls to other tax offices outside their boundaries during peak periods, which has led to a massive reduction in dropout rates and waiting times. This allows us to serve our customers better, while at the same time reducing the burden on our Infocentre employees. Of course, regional and national distribution means that telephone work is no longer a matter for each individual tax office. Management across tax offices is now just as necessary as preparing our employees better for new situations. Although seminars on communication skills were conducted successfully in the past, it was not yet possible to implement comprehensive training for all of the personnel involved. A training campaign was started in this area in 2014 with the aim of implementing sustained changes. Above all, those in direct contact with the employees concerned have the authority to convey knowledge directly to employees. As a result, instead of simply taking part in a seminar and then independently implementing the training at the workplace, training now means continuous coaching by team leaders.

Quality management process map A process map based on quality risks is used for planning the use of QM instruments and measures in each office. The process map allows risky work flows to be identified and appropriate QM instruments to be planned and implemented. Responsibilities and work flow descriptions are analysed and evaluated when creating the quality management process map in order to determine the quality assurance measures that need to be developed and introduced.

Quality circles focus on the objectives of increasing independent responsibility in their area, identifying problems in their own working area and finding solutions independently, facilitating cross-team and cross-hierarchy communications and establishing a continuous improvement process for quality and productivity.

Quality circle Quality circles are working groups established in an organisational unit (administrative office) to improve the quality of performance, deal independently with problems and find solutions in their own areas of responsibility.

We will undoubtedly be confronted by new challenges in the future, such as considerations about whether voice media are always the most suitable form of communication. By providing other media channels that do not necessarily require real-time communications, we might be able to further improve service while at the same time improving our ability to schedule and perform the work needed.

3. Further development of quality management Process maps and quality circles were introduced in the offices of the tax and customs administration as implementation measures under the project for further developing the quality management system of the tax and customs administration. Assistance was provided by representatives of the Federal Ministry of Finance and regional management of the Tax and Customs Coordination Office (including the internal heads of organisation development and of quality and knowledge management) from the very start of the pilot project. 42

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F. Facts and figures Numbers form the foundation of the tax and customs world. The facts and figures section provides interesting internal data, including key performance figures and much more, that give an overview of the different areas of the ministry.

Tax and Customs Revenues in EUR millions

2010

2011 2012 2013

Value-added tax, incl. customs import VAT

22,466.69

23,391.39

24,602.33

24,870.00

Wage tax

21,567,26

21,783.87

24,524.14

24,600.00

3,037.21

2,678.21

2,601.95

3,120.00

4,632.62

5,277.10

5,326.63

6,020.00

Capital yields tax

2,787.48

2,511.50

2,720.00

Income tax



Corporation tax

Audit for Large Company Traders (AULT)

2010

2011 2012 2013

No. of audits / special VAT audits

3,813

3,849

3,720

3,290

Surplus audits / special VAT audits

601.99

1,143.36

1,243.91

690.23

360

440

455

417

38.09

70.71

29.37

126.21

No. of cases other auditing measures

970

1,042

732

828

Surplus other auditing measures

7.86

3.23

5.57

6.82

No. of audits VAT foreigners Surplus audits VAT foreigners

Custom duties

223.72

248.34

224.68

210.00

Excise duties on alcohol

328.21

322.04

320.53

320.00

Excise duties on mineral oil

3,853.69

4,212.52

4,181.38

4,170.00

Companies checked

29,490

30,015

30,035

36,467

Excise duties on tobacco

1,501.99

1,568.38

1,620.79

1,660.00

Employees checked

67,477

65,574

58,069

73,599

Transfer of family

3,390.15

3,177.07

3,135.67

3,160.00

Illegal employees

16,370

13,551

10,026

11,310

Criminal charges

12,883

10,917

8,571

9,867

Gambling checks performed

762

661

Budget (Preliminary Result) TO/CO/LCA/TI in EUR millions Personal costs Material expenses

2010

2011 2012 2013

449.41

454.23

498.05

516.34

89.01

95.04

100.46

95.11

Financial Police (FP)

Investigation No. of cases TI Surplus TI, in EUR millions

44

2010

2010

2011 2012 2013

2011 2012 2013

155

150

139

136

28.15

10.17

27.74

27.54

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Tax Offices (TO)

2010 2011 2012 2013

Tax Office for Duties, Transfer Taxes and Games of Chance No. of audits Surplus from audits, in EUR millions

Tax Offices (TO) Completed tax returns, in millions

570

535

529

532

43.37

97.44

58.38

91.57

Safeguarding of Revenue

2010 2011 2012 2013 1.65

1.77

1.99

2.04

No. of audits / special VAT audits

30,841

29,857

27,124

27,595

Surplus from audits / special VAT audits, in EUR millions

651.72

654.66

566.11

642.98

No. of inquiries / reviews

36,962

38,812

43,424

42,074

79.49

96.40

96.94

145.94

Surplus from inquiries / reviews, in EUR millions

Arrears with issued statements, in EUR millions

1,664

1,724

1,735

1,822

No. of joint audits of wage-dependent taxes

10,667

10,863

12,058

11,594

Total arrears, in EUR millions

6,680

6,904

7,272

7,674

Surplus from joint audits of wage-dependent taxes, in EUR millions

188.06

177.92

135.62

149.04

Traffic of Goods FinanzOnline (total)

No. of clearancees, in millions

Number of users, in millions

Controls (declarations)

2.22

2.54

2.81

3.07

3.77

4.01

4.01

4.05

195,582 172,488 171,986 188,192

Audits and Controls General Assessment

No. of completed audits

1,013

1,072

1,145

1,132

FinanzOnline quota employee assessment (L1)

Surplus, in EUR millions

16.60

38.74

71.13

25.29

Controls (customs supervision)

5,057

6,045

5,893

5,514

Mobile controls (deployments)

2,308

2,307

2,753

2,870

48%

54%

57%

60%

Processing time employee assessment (receipt until assessment notice), in calendar days

22

18

19

17

Processing time family allowance (receipt until assessment notice), in calendar days

17

17

17

20

3.44

3.43

3.63

3.69

687,578

641,356

579,648

574,909

No. of annual employee assessments completed (L1), in millions Completed receipts family allowance

Business Assessment and Auditing FinanzOnline quota business assessments

83

84

84%

85%

Processing time business assessment (receipt until assessment notice), in calendar days

20

21

20

19

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Excise Duties Declarations (incl. distillation of alcohol) Supervision

63,529

73,631

69,055

57,943

7,697 9,437 8,411 7,963

Travellers Controls of travellers Tax refunds, in millions

619,435

569,378

290,366

291,532

1.45

1.45

1.51

1.72

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