Seizure: Benko's Villa leaves unanswered questions

Benko is currently in the media limelight through his Cigna empire. A private villa is primarily about a community. In 2016, the former Schlosshotel Igls was bought by Schlosshotel Igls GmbH. The hotel was demolished and a luxury property was built in its place where Benko lives. Benco's Lara Private Trust is behind the company. At the end of December, it became known that the Austrian Republic wanted to seize the villa.

Initially, the company was said to owe more than twelve million euros in sales tax. The private foundation denied the allegations against VAT was paid on the construction of the new building, and the money was later “properly” recovered through input tax, according to the foundation. However, the tax authorities are of a one-sided view that “input taxes already refunded should be refunded”. The reasons for the recovery are still unclear.

Discussion of input tax

On Tuesday, a spokesperson for Finance Minister Magnus Brunner (ÖVP) spoke on the X platform (Twitter), after the department head had already been asked on social networks to take a stand on the new cause. He could not go into more detail on the specific case due to the duty of confidentiality under the tax law, but he provided details of the reasons for the tax office's refund of input tax.

In principle, “companies can reclaim input tax if an asset is used commercially,” the spokesperson said. However, if the tax office decides during audit that it is not a commercial use, then the input tax deducted will become a sales tax liability. The spokesman elaborated on the seizure without referring to the case of the private villa.

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“If, from a financial perspective, there is a risk that collection of the VAT debt is at risk, a lien may be registered over the property in question for the benefit of the taxpayer,” the spokesperson said. Wolfgang Peschorn, head of the fiscal prosecutor, says in the Ö1-Journal that he is convinced that the tax administration acted “very carefully” in the current case.

The crux of the case is that Benko allegedly lived in a villa owned by his private trust. A financial law expert tells that, for example, a company can reclaim sales tax if a re-letting is planned and the new tenant pays sales tax to the state. However, the right to deduct input tax may lapse if the tax office determines during a later audit that the rent is not “out of reach”.

For example, if the tenant is a family member and the third party has paid less than the amount due. But of course the shareholder of the company that owns the building is also allowed to live in it – as long as it happens under “arm's length” conditions, according to experts, without specifically going into the reason.

Peschorn demands transparency from Cigna

Except in the case of the private villa, but for Benco's Cigna group, Peskorn demanded full transparency. The chief financial prosecutor demanded that creditors, including the Republic of Austria, now disclose everything in Cigna to agree to a restructuring plan. “Now is the time for transparency, everything needs to be on the table.”

Self-administered restructuring proceedings were recently opened at the Vienna Commercial Court for the group's operational subsidiaries and flagships, Cigna Prime and Cigna Development, after parent company Cigna Holding. Signa Prime includes the most important properties, including KaDeWe in Berlin, Alsterhaus in Hamburg, Oberpollinger in Munich and the “Elbtower” in Hamburg, which is currently under construction, and the Lamarr department store in Vienna. 30 percent of creditors' claims should be satisfied. In order for the restructuring plan to be accepted, most creditors must agree.

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“We need to know what the demands are. As lenders, we need to know how the administration took place, what responsibilities should be emphasized to the members, but also to the advisers, supervisory boards and advisory board members,” Peschorn said. Only then can you decide whether you agree or not. “But there's still a long way to go.”

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