Tax Stories

Clemens Nowotny & Hannes Gurtner (LeitnerLeitner, Taxand) on teaching as an art

Episode Summary

Two tax partners of the Austrian (and CEE) leading tax firm Dr. Clemens Nowotny and Dr. Hannes Gurtner share their views on life, management and of course - tax.

Episode Notes

For many years both, Dr. Hannes Gurtner and Dr. Clemens Nowotny are tax partners of a leading tax firm in Austria and CEE – LeitnerLeitner. Hannes is specialised on VAT, but Clemens – on international tax, although both are auditors as well. 

Social media, reading, direct contact

We started the conversation about LinkedIn and social media at all – Hannes is not there, because he rather prefers a personal contact. This seems to be a luxury Hannes enjoys – not to check the screens every 5 minutes and dedicate time to the family. It’s an interesting approach – reading mostly technical literature, no focus on social media, just client direct relations. I recently read in a book by a psychologist that this nowadays becomes a privilege of strong personalities, but a correct one – to set borders between work and personal life. 

Teaching as an art

Not only both love teaching, but Hannes compared it to an entertainment, almost like an artist on a stage. One can feel how much both enjoy their profession and do it with all their hearts. 

Why Austria is 14th richest country?

It was revealing to learn that many high net worth individuals move to live in Austria. Clemens well describes – why and is it because of the tax system. In Austria the highest personal income tax bracket is above EUR 60k – 50%; > 1m – 55%. Salaries average from 4k to 17k. Clemens explained why this high tax did not create an emigration of the best brain from Austria, but had quite an opposite effect. 

Schumpeter

We also spoke of Mr. Schumpeter – the Austrian Minister of Finance a century ago. A column in the Economist is named by him. He’s been praised as a champion of innovation and entrepreneurship. We touched upon – could he have an impact on the current tax system in Austria. Also - Wikipedia says Austria is the 14th richest country in terms of GDP per capita – is it partially because of the tax system?

1896 tax reform

Austria had a tax reform in 1896. There was a high distrust in the system & evasion before the reform. “It was the high rates that dug the grave for the Austrian tax morale.” The reform introduced the ability-to-pay principle; lowered taxes on businesses and real estate, commissions by taxpayers – intermediaries between taxpayers and authorities; stricter penalties (3x –> 9x), more rights by taxpayers to defend and reach a fair result. The reform lasted for 15 years, with a substantial increase of taxes collected. Some authors say it was a break-though in the Austrian tax system. One taka-away might be that politicians are looking for short term results (3-4 years), whereas tax policy should be a long term play. 

VAT fraud still killing the economy

In many CEE countries the tax authorities more often attack exporters rights to apply 0% VAT on the sales, based on the murky answers by the foreign buyer to their tax authorities – we discussed with Hannes - could these attacks ever end, e.g. with the new VAT system approaching soon in the EU? He admits that it kills the economy that 0.1% fraudsters cause the authorities to scrutinise 99.9% of the others with heavy compliance burden. Hannes rather sees technology advancement as a solution, but it needs a unified approach.