The present thesis focuses on the taxation of municipality associations. Municipality associations are explicitly regulated in the Austrian constitution. They are legal persons under public law with legal personality. In the matter of taxation, the municipality association is treated under prevailing opinion such as a public- law body. If the municipality association participates in the exercise of official authority, it will only have limited tax liability. In case the municipality association operates in the private sector however, it maintains under certain conditions a so called ?Betrieb gewerblicher Art?, a commercial institution established under public law and 100% owned by the national or local authorities (hereinafter BgA). This BgA is its own subject of corporate taxation and falls under the unlimited taxation. Due to the fact that the BgA of a municipality association is subject to the Budgeting and Accounts regulation, the accounting standards of the Austrian commercial code are not relevant, even if the BgA exceeds the turnover limit of ? 700.000,--. As BgAs are not profit- orientated, they have the possibility to record continual losses. Altough each BgA is its own subject of corporate taxation, several BgA can be combined to one BgA, so that losses can be offset with future profits. In case the associated communes provide a service to the BgA of the municipality association which is not based on the arms length principle, the question of covert distribution of profits arises. In value added taxation BgA are treated similar as in corporation tax law. However, this approach does not conform to the directive on the VAT system and the jurisdiction of the ECJ, as the European Union law focuses in general on the potential competition with private entrepreneurs. Finally this thesis demonstrates possible relationships between the municipality association and its associated communes.