Tax scheme reporting (MDR) is an obligation that has raised many practical questions for years. The main benefit test (MBT) plays a key role here. It is this test that allows you to determine whether a given arrangement can be considered a tax scheme at all – but only if there is also a general distinguishing feature.
In practice, taxpayers often treat the MBT as a simple formality. However, it is a tool that requires extremely precise analysis, combining knowledge from many areas of tax law.
What is MBT?
According to Article 86a § 2 of the Tax Ordinance, an MBT is considered to have been fulfilled if a reasonable taxpayer, guided by lawful objectives other than obtaining a tax advantage, could choose a different course of action that would not lead to that advantage, and the tax advantage itself constitutes the main or one of the main expected benefits of the arrangement.
It is therefore clear that the assessment is not limited to the simple question: “Did the taxpayer achieve a tax benefit?”. Alternatives and motives for action must also be taken into account.
Objectively and subjectively – the mixed nature of MBT
The MBT combines two approaches:
- objective – how a “reasonable taxpayer” would behave in a similar situation, assessment of facts, documents and economics of the transaction,
- subjective – what were the actual objectives and motives of a particular taxpayer, often revealed in their internal documents or business decisions.
Only the combination of these two aspects creates a complete picture.
The role of the National Revenue Administration
The taxpayer or advisor performs an ex ante MBT assessment, i.e. before reporting the scheme. However, the final assessment may take place during a customs and tax audit.
The head of the National Revenue Administration has the right to decide that the MBT was met, even if the taxpayer thinks otherwise.
In practice, this means the risk of severe criminal tax sanctions if the scheme is not reported and the authority decides that it should have been.
Article 86f of the Tax Ordinance – correct information
The reporting obligations arise from Articles 86b–86d of the Tax Ordinance, while Article 86f specifies what elements must be included in the information about the tax scheme.
The correctness of MDR-1 information is therefore not limited to filling in a form. The key elements are:
- properly identifying the distinguishing features,
- correctly assessing whether MBT exists,
- a description of the arrangement that allows the authority to understand its essence and objectives.
An error in any of these elements constitutes faulty reporting.
Why is professional analysis necessary?
MBT cannot be properly assessed in isolation from tax law as a whole. Interdisciplinary knowledge is required, covering:
- CIT – revenues, costs, losses, restructuring, exemptions, reliefs
- PIT – partners and natural persons,
- VAT – bad debt relief, contributions in kind, deductions, exemptions, place of supply of services
- WHT – cross-border payments, exemptions, UPO, MLI
- PCC, excise duty, property tax – often occurring in the background of transactions.
Only an MDR expert who can link all these elements is able to correctly assess whether a given arrangement complies with MBT and requires reporting.
Conclusion
The main benefit test does not work in isolation – it must be linked to a distinguishing feature. The MBT assessment is mixed, combining objective and subjective elements, which increases the risk of divergent assessments between the taxpayer and the National Revenue Administration.
Therefore, correct MDR reporting is not a simple formality. It is a process that requires knowledge, experience and reliable interdisciplinary analysis. Only such an approach ensures security for the taxpayer and protects against legal consequences.
The conclusion is simple: correct MDR-1 is not a matter of form – it is a matter of professionalism.
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